.As EIU, S&P says a 650,000 bpd plant is cutting import dependence, boosting GDP, and reshaping Africa’s energy map
UGO AMADI
For decades, Nigeria lived an economic paradox: Africa’s largest crude oil producer importing nearly all its petrol. That era is ending. The 650,000-barrels-per-day Dangote Petroleum Refinery & Petrochemicals has fundamentally reshaped Nigeria’s downstream sector, slashing reliance on imported fuel and strengthening the country’s external position, according to the Economist Intelligence Unit.
In its latest assessment, the EIU said the refinery met nearly 80% of domestic petrol demand in April and is producing enough to cover local consumption as it approaches full capacity.
The plant’s gradual ramp-up since May 2023 has reversed a system the EIU called “long dysfunctional.” “The country’s main refineries, all state owned, had been inoperative for years and Nigeria was almost entirely reliant on costly imported fuel,” the report stated.
The impact goes beyond the pump. By cutting import demand and ramping up exports of refined products, the refinery is improving Nigeria’s balance of payments. The EIU expects full capacity operations and planned expansion to support real GDP growth and foreign exchange earnings through 2026 and 2027, with a potential doubling of output by decade’s end.
According to the report, the emergence of the refinery has reduced import dependence, improved domestic fuel availability and strengthened Nigeria’s balance of payments position through lower import demand and rising exports of refined petroleum products.
The research and analysis division of The Economist Group, London added that the refinery’s attainment of full operational capacity and its planned expansion would further support Nigeria’s economic growth and foreign exchange earnings over the medium term.
“Meanwhile, the attainment of full capacity at, and an increase in exports from, the Dangote refinery will support real GDP growth and foreign exchange earnings in 2026 and 2027 and beyond, as a planned doubling of the plant’s output comes on stream around the end of the decade,” it added.
Industry analysts said the refinery is increasingly positioning Nigeria as an emerging refining and export hub, altering energy trade flows across Africa and reducing the vulnerability associated with fuel import dependence.
The EIU noted that the refinery’s expansion has coincided with major reforms in Nigeria’s downstream sector, including the removal of fuel subsidies and the introduction of market driven pricing mechanisms.
The report, however, said the transition from a state dominated fuel import structure to large scale domestic refining has triggered resistance from interests linked to the old import regime.
The latest tensions emerged following the decision by the Nigerian Midstream and Downstream Petroleum Regulatory Authority to relax restrictions on petrol imports despite the refinery’s growing capacity to meet domestic demand.
Dangote Industries subsequently initiated legal action, arguing that continued import approvals undermine domestic refining investments and conflict with the objectives of the Petroleum Industry Act, which seeks to encourage local refining capacity and reduce import dependence.
Analysts noted that the availability of large-scale domestic refining capacity has improved Nigeria’s energy security and reduced exposure to external supply shocks and foreign exchange volatility.
The Centre for the Promotion of Private Enterprise also cautioned against unrestrained importation of petroleum products, warning that such a policy could weaken Nigeria’s industrialisation drive and discourage investments in domestic refining.
Chief Executive Officer of CPPE, Muda Yusuf, said continued dependence on imported fuel had historically contributed to pressure on foreign reserves, exchange rate instability and fiscal leakages.
The refinery’s growing impact is also being reflected in Nigeria’s broader macroeconomic indicators. Earlier this month, S&P Global Ratings cited increased domestic refining capacity and rising hydrocarbon exports among the major factors supporting Nigeria’s sovereign credit rating upgrade – the first in 14 years.
Beyond Nigeria, analysts said the refinery is increasingly being viewed as a strategic industrial asset for Africa, where many countries remain heavily dependent on imported fuel despite rising demand for transportation, manufacturing, and power generation.
However, S&P Global Ratings sees the same trend. In upgrading Nigeria’s sovereign credit rating to “B” from “B-” in early 2026 — the first upgrade in 14 years — the agency cited expanded domestic refining capacity as a key driver.
“Significant refining capacity is now also online; Dangote Industries Ltd.’s large scale refinery and petrochemical complex has ramped up to near its maximum capacity of 650,000 barrels per day,” S&P noted.
The agency projects Nigeria’s current account surplus will rise to 5.8% of GDP in 2026 from 4.8% in 2025, helped by higher domestic refining and hydrocarbon exports. Foreign exchange reserves have climbed from about $33 billion in 2023 to nearly $50 billion by early 2026, partly due to lower import demand for refined products.
The global ratings agency specifically identified the operational ramp up of the 650,000 barrels per day Dangote Petroleum Refinery & Petrochemicals as a major contributor to Nigeria’s improving balance of payments position and broader economic resilience.
According to S&P, the refinery’s full capacity operations are helping to strengthen Nigeria’s current account surplus, reduce dependence on imported refined petroleum products, and improve foreign exchange liquidity.
“Significant refining capacity is now also online; Dangote Industries Ltd.’s large scale refinery and petrochemical complex has ramped up to near its maximum capacity of 650,000 barrels per day,” the report stated.
S&P projected that Nigeria’s current account surplus would improve to 5.8 per cent of GDP in 2026 from 4.8 per cent in 2025, supported partly by increased domestic refining and hydrocarbon exports.
The report noted that the refinery is helping to ensure the availability of refined fuel, gas, and fertiliser for the domestic market, while also providing a buffer against global supply disruptions triggered by ongoing geopolitical tensions in the Middle East.
The agency further stated that Nigeria’s improving external position has been supported by reduced fuel import dependence, the removal of fuel subsidies, exchange rate liberalisation, and higher oil production.
Foreign exchange reserves, according to S&P, have risen significantly from about $33 billion in 2023 to nearly $50 billion by early 2026, aided partly by lower import demand for refined petroleum products following the commencement of operations at the Dangote Refinery.
The report also highlighted the refinery’s broader role in supporting Africa’s industrialisation ambitions, noting that Nigeria is transitioning from being primarily a crude oil exporter to an emerging producer and exporter of refined petroleum products.
S&P disclosed that Dangote Industries has already unveiled plans to undertake feasibility studies aimed at expanding refining capacity to about 1.4 million barrels per day from the current 650,000 barrels per day.
The agency said the planned expansion, alongside the rehabilitation of other local refineries, could further strengthen Nigeria’s economy and deliver additional gains to the country’s balance of payments position over the next few years.
While acknowledging that global crude oil prices and market driven pricing continue to influence domestic fuel costs, S&P maintained that the increased local refining capacity provides Nigeria with greater energy security and reduced exposure to external supply shocks.
The report also linked Nigeria’s improving macroeconomic outlook to reforms undertaken since 2023, including exchange rate liberalisation, fiscal reforms, higher petroleum revenue remittances, and efforts to improve oil production through enhanced security in the Niger Delta.
S&P said Nigeria’s economic growth is expected to remain firm despite inflationary pressures, with reforms continuing to support investor confidence and non-oil sector expansion.
The stable outlook, according to the agency, reflects a balance between Nigeria’s improving external position and continuing structural challenges such as a narrow tax base, high inflation, and low formal employment levels.
As the EIU put it: the refinery has transformed Nigeria’s “long dysfunctional” downstream sector. And in doing so, it’s giving the country something it hasn’t had in decades: control over its fuel supply, and the foreign exchange that used to pay for it.
Interestingly energy pundits are watching whether regulators maintain policy consistency on imports, and if the planned expansion to 1.4 million bpd moves from feasibility to execution.
