May 23, 2023/CSL Research

The first refined Premium Motor Spirit (PMS), also called Petrol from Dangote
Refinery and Petrochemicals, will hit Nigeria’s local market by end of July or
beginning of August, chairman of Dangote Group, Alhaji. Aliko Dangote confirmed.

Dangote made the disclosure in his remarks at the official commissioning of the 650,000 barrels-per-day Dangote Refinery at Ibeju-Lekki in Lagos State, on Monday. He said the facility has a capacity to process 650,000 barrels per day of crude oil (plus 900,000 tonnes of polypropylene) in a single train – which is the largest in the world.

The group’s huge investment of over US$18.5billion in the oil and gas industry has been prompted by the desire to support and contribute its quota to the Federal Government’s sustained effort to transform the economy and properly position the country as the leading nation in Africa. Having seen the giant stride made in the fertilizer market, we expect the same in the downstream sector of Nigeria’s oil and gas industry.

With a 20% stake in the project, the CEO of the Nigerian National Petroleum Co, Mele Kyari earlier stated the NNPC will stop importing refined products once the refinery commences operations at full capacity. He also notes in news reports that the NNPC will sell 330,000 barrels-per-day minimum by right for the next 20 years and has acquired the right to purchase 20% of production from the plant.

Looking at the bigger picture, it is projected that the refinery when fully operational will provide 135,000 permanent jobs, a relief for job market, considering the current unemployment rate of 33%.

Also, regarding the refinery’s impact on foreign exchange stability, the governor of the Central Bank of Nigeria, Godwin Emefiele hinted that the refinery will save Nigeria 30% -35% of foreign exchange needed for petroleum products importation. We also expect export proceeds from the refinery to boost reserves and FX liquidity.

The CBN’s RT200 program will most likely receive a significant boost from the refinery’s export activities. In conclusion, on PMS availability, we believe that sufficient local refining capacity would boost the availability of the product and bring a lasting end to the persistent issue of fuel scarcity which handicapped the country’s economic activities for most of 2022.

The commissioning and possible start of operation of the refinery complex is the major positive news investors have looked forward to in a while, admist several economic and socio-political setbacks.