How Dangote leads and controls fuel market in Nigeria

By John Egie

Dangote refinery is leading and taking control of over 50 percent of Nigeria fuel market.

As a demonstration of it’s significant influence on the petroleum industry, the NNPCL has slashed the pump price of Premium Motor Spirit, petrol, from N935 to N910 per liter in Abuja. The price reduction is yet to reflect and operationalized in Lagos and other cities across Nigeria.

The price cut by NNPCL is in response to Dangote refinery which, last weekend initiated the price adjustment when it slashed the gantry price of petrol from N835 to N825 per liter and thereby putting significant pressure on competitors.

To further demonstrate Dangote leading role in the fuel market in Nigeria, fuel imports into West Africa spiked after Dangote reduced petrol output due to ongoing maintenance. The supply drop forced petrol traders in Nigeria and other nearby countries to increase imports from Europe, a source, A&P Global said.

Imports to Nigeria and Togo climbed from 200,000 bpd in January to over 300,000 bpd in March while imports in April stayed near 250,000bpd which isthe optimum Nigeria demand.

During the maintenance, Engineers addressed design flaws of the refinery’s key petrol making unit, the Residue Fluid Catalytic Cracker (RFCC) and ramped up related units like akylation and polypropylene. The RFCC had reached 70 percent capacity before the shutdown and Dangote now plans to reach full capacity of 650,000 bpd to meet domestic demand.

Despite the disruption that occured during April supply outage due to the 4-week maintenance, Dangote maintained steady exports of diesel, jet fuel and residual fuel and supply of petrol to the market has significantly improved since May 12, petroleum traders confirmed.

During the output cut, importers used the port of Lome in Togo to bring in fuel. They engaged a trading tactics that undermined Nigeria’s push for naira-based transactions by breaking bulk large shipments into smaller volumes for Nigeria, avoiding locally taxes and keeping payments in dollars.