Africa Losing $90bn Annually
…Becomes Dumping Ground for Substandard Fuel – Dangote Warns
By Patience Ikpeme
Africa is increasingly serving as a destination for cheap, often toxic, and substandard petroleum products, many of which are blended to levels that would not be permitted in Europe or North America.
This grave concern was conveyed by Aliko Dangote, President and Chief Executive of Dangote Industries Limited, during the ongoing West African Refined Fuel Conference held in Abuja.
The event was organized by the Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA) and S&P Global Commodity Insights.
Dangote disclosed that, owing to the continent’s limited domestic refining capacity, Africa annually imports over 120 million tonnes of refined petroleum products at an approximate cost of $90 billion.
He extended appreciation to the management of the Nigerian National Petroleum Company Limited (NNPC) for providing some cargoes of Nigerian crude since the commencement of his refinery’s production. Nevertheless, he revealed that his company currently imports between 9 and 10 million barrels of crude monthly from the United States of America and other countries.
According to him, “As we speak today, we buy 9 – 10 million barrels of crude monthly from US and other countries.”
The industrialist further explained that despite producing approximately 7 million barrels of crude oil per day, Africa refines only about 40% of its daily consumption of 4.3 million barrels of refined products domestically.
This stands in stark contrast to regions like Europe and Asia, which refine over 95% of their consumption. “So, while we produce plenty of crude, we still import over 120 million tonnes of refined petroleum products each year, effectively exporting jobs and importing poverty into our continent.
That’s a $90 billion market opportunity being captured by regions with surplus refining capacity. To put this in perspective: only about 15% of African countries have a GDP greater than $90 billion. We are effectively handing over an entire continent’s economic potential to others—year after year,” he observed.
Dangote conveyed his belief in the efficacy of free markets and international cooperation, but added that trade must be rooted in economic efficiency and comparative advantage, not at the expense of quality or safety standards.
He conveyed that “it defies logic and economic sense for Africa to be exporting raw crude only to re-import refined products—products we are more than capable of producing ourselves, closer to both source and consumption.”
Reflecting on the monumental task of delivering the world’s largest single-train refinery, Dangote recounted a range of challenges encountered, encompassing technical, commercial, and contextual hurdles unique to the African landscape. He described building such refineries as one of the most capital-intensive and logistically complex industrial facilities ever constructed.
The Dangote refinery project, he said, necessitated clearing 2,735 hectares of land—an area seven times the size of Victoria Island—of which 70% was swampy. This required the pumping of 65 million cubic meters of sand to stabilize the site and raise its elevation by 1.5 metres, along with the installation of over 250,000 foundation piles and millions of metres of piping, cabling, and electrical wiring.
“At peak, we had over 67,000 people on-site of which 50,000 are Nigerians, coordinating around the clock across hundreds of disciplines and nationalities. Then, of course, came the COVID-19 pandemic which set us back by two years and brought new levels of complexity, disruption, and risk. But we persevered,” he noted.
The refinery project also required the construction of a dedicated seaport, as existing Nigerian ports lacked the capacity to handle the size and volume of equipment needed. This included the import of over 2,500 pieces of heavy equipment and 330 cranes, alongside the establishment of the world’s largest granite quarry with a production capacity of 10 million tonnes per year. “In short, we didn’t just build a refinery—we built an entire industrial ecosystem from scratch,” he conveyed.
Despite the refinery’s technical success, Dangote identified significant commercial challenges, particularly concerning volatile exchange rates, which moved from N156/$ at the project’s inception to N1,600/$ at its completion. Challenges around crude oil sourcing also persist; despite Nigeria’s reported production of approximately 2 million barrels per day, the refinery has found it difficult to secure crude at competitive terms.
“Rather than buying crude oil directly from Nigerian producers at competitive terms, we found ourselves having to negotiate with international trading companies, who were buying Nigerian crude and reselling it to us—with hefty premiums, of course,” he revealed.
Logistics and regulatory bottlenecks have also imposed a considerable burden. Port and regulatory charges, he stated, reportedly account for 40% of total freight costs, sometimes amounting to two-thirds as much as chartering the vessel itself. “Refiners in India, who purchase crude oil from regions even farther away, enjoy lower freight costs than we do right here in West Africa because they are not saddled with exorbitant port charges,” Dangote pointed out.
He further added that, in terms of port charges, it is currently more expensive to load a domestic cargo of petroleum products from the Dangote Refinery, as customers incur fees at both the point of loading and the point of discharge. In contrast, when loading from Lomé, a competitor, customers pay only at the point of discharge.
Dangote also criticized the absence of harmonized fuel standards across African nations, which he described as creating artificial barriers for regional trade in refined products. “The fuel we produce for Nigeria cannot be sold in Cameroon or Ghana or Togo, even though we all drive the same vehicles. This lack of harmonisation benefits no one—except, of course, international traders, who thrive on arbitrage. For local refiners like us, it fragments the market and imposes unnecessary inefficiencies.”
Citing a specific challenge with diesel production in Africa, Dangote noted that, “to give one example, the diesel cloud point for Nigeria is 4 degrees. Without going into the technical details, this means that the diesel should work at a temperature of 4 degrees centigrade. Achieving this comes at a cost to us and limits the types of crude we could process. But how many places in Nigeria experience temperatures of 4 degrees? Other African countries have a more reasonable range of 7 to 12 degrees. This is a low hanging fruit which could be addressed by the regulators.”
He also spoke of the growing influx of discounted, low-quality fuel originating from Russia, often blended with Russian crude under price caps and subsequently dumped in African markets. “And to make matters worse, we are now facing increasing dumping of cheap, often toxic, petroleum products—some of which are blended to substandard levels that would never be allowed in Europe or North America,” he cautioned.
Dangote concluded his address by calling on African governments to emulate the example of the United States, Canada, and the European Union, which have implemented protective measures for their domestic refiners.
