Nigeria’s Dangote Refinery, Africa’s largest single-train refinery, is facing significant operational and logistical challenges that have pushed back initial production targets, with industry analysts now viewing the goal of reaching full capacity of 650,000 barrels per day by the end of 2026 as increasingly unlikely.
The primary issue is securing consistent crude feedstock, with domestic producers often preferring to export crude for foreign exchange rather than sell to the refinery on less favourable terms, forcing the facility to source some crude internationally and adding to costs. Evacuation and distribution of refined products across Nigeria also face substantial hurdles, including inadequate road infrastructure, port congestion, and insufficient pipeline networks, hindering efficient supply of petrol, diesel, and aviation fuel to the domestic market despite available processing capacity.
Financial analysts have also flagged the project’s significant debt burden, which requires steady cash flow from full production to service. Dangote Group chairman Aliko Dangote acknowledged the initial challenges but expressed confidence in resolving them, pointing to ongoing efforts to optimise crude sourcing and streamline distribution. The Nigerian government is reportedly engaging major international oil companies operating in the country to encourage them to prioritise crude supply to the refinery.
Source: Reuters Africa