Policy Failures May Cost Nigeria Historic Energy Windfall, Expert Warns
Nigeria risks forfeiting a once-in-a-generation opportunity in the global energy market due to significant policy missteps, regulatory frictions, and inconsistent crude supply that have severely constrained operations at the massive 650,000 barrels-per-day Dangote Petroleum Refinery. This stark warning comes from multidimensional energy expert Abdulrazaq Hamzat, Executive Director of the Foundation for Peace Professionals (PeacePro), who emphasized that Nigeria's current trajectory could squander a historic economic advantage.
Global Refinery Closures Create Unprecedented Opportunity
Hamzat cited compelling data from energy intelligence firm Kpler, revealing that refinery shutdowns across Europe and North America have permanently eliminated between 800,000 and 900,000 barrels per day of refining capacity. This structural tightening of global fuel markets has significantly increased worldwide dependence on late-cycle mega refineries, particularly Nigeria's Dangote facility and Mexico's Dos Bocas refinery.
"This is not a refinery problem; it is a policy problem," Hamzat declared emphatically. "Nigeria has built a facility capable of shaping regional fuel markets at a time when Europe and North America are exiting refining. However, inconsistent crude supply, weak policy execution and regulatory uncertainty have prevented it from operating at full strength."
Operational Challenges and Capacity Constraints
The Dangote Refinery has been operating at only about 60-65 percent capacity, primarily due to irregular crude oil deliveries by the Nigerian National Petroleum Company Limited (NNPCL). Despite the Federal Executive Council approving a naira-for-crude framework in 2024 to prioritize domestic refining, implementation has remained disappointingly weak according to Hamzat's analysis.
Several critical issues have emerged:
- Uneven enforcement of the Domestic Crude Supply Obligation under the Petroleum Industry Act
- Failure by the Nigerian Upstream Petroleum Regulatory Commission (NUPRC) to publish verified crude supply volumes delivered to the refinery
- Mechanical challenges at the Residue Fluid Catalytic Cracking (RFCC) unit, worsened by fluctuating crude quality
- Regulatory uncertainty around pricing, logistics, and export approvals overseen by the Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA)
Massive Economic Potential at Stake
Kpler estimates reveal the staggering potential of the Dangote Refinery at full capacity:
- Approximately 300,000 barrels per day of gasoline
- 150,000 barrels per day of gasoil
- 140,000 barrels per day of jet fuel
These volumes could significantly ease fuel tightness in the Atlantic Basin while dramatically boosting Nigeria's export earnings. The ongoing corrective shutdown of the RFCC unit represents a critical inflection point, with a successful restart potentially shifting the refinery from marginal participation to structural relevance in global fuel markets by mid-2026.
Seven Urgent Steps for Government Action
To unlock the Dangote Refinery's full potential, Hamzat outlined seven urgent steps the Federal Government must implement immediately:
- Ensure consistent crude supply through strict enforcement of the Domestic Crude Supply Obligation
- Establish a federal inter-agency task force involving NNPC, NUPRC, NMDPRA and Dangote management to coordinate logistics and throughput
- Provide clear regulatory guidance by fast-tracking export, pricing and product evacuation approvals
- Conduct urgent technical repairs at the RFCC unit with international support where necessary
- Implement transparent weekly performance reporting verified by independent auditors
- Provide deliberate support for exports to Atlantic Basin markets to boost foreign exchange inflows
- Remove policy conflicts through alignment of directives across NNPC, NUPRC, NMDPRA and the Ministry of Petroleum
"The world has shifted. If Nigeria fails to fix its internal bottlenecks, this refinery will exist without influence, and the country will remain a fuel importer in a seller's market," Hamzat warned with grave concern. The expert's analysis suggests that Nigeria stands at a crucial crossroads, with policy decisions in the coming months determining whether the nation captures a historic energy windfall or watches this opportunity slip through bureaucratic fingers.
