The Dangote Oil Refinery is poised to significantly elevate Nigeria’s economy over the next few years, with projections estimating that the country’s Gross Domestic Product (GDP) will reach $322 billion by 2025. A recent report titled “Impact of Dangote Refinery on the Nigerian Economy” by Data Services & Resources Ltd has shed light on the refinery’s anticipated effects on national economic growth. In the absence of the refinery, Nigeria’s GDP was expected to grow at a modest rate of 3.34% in 2024, inching up to 4.13% by 2030. However, the report revealed that with the establishment of the refinery, GDP growth rates are set to improve to 4.15% in 2024 and soar to 6.21% by 2030. This indicates a transformative potential for the Nigerian economy.
The report detailed the remarkable contributions of the Dangote Refinery to the nation’s GDP, forecasting an increase from N234.43 trillion in 2023 to N304.8 trillion in 2024, followed by an ascent to N364.94 trillion in 2025. Expectations further indicate that GDP will rise to N432.24 trillion by 2026 and an impressive N806.91 trillion by 2030. These projections underscore the crucial role of the refinery in enhancing Nigeria’s economic landscape. Afolabi Olowookere, the Managing Director at Data Services & Resources Ltd, indicated that the refinery would push GDP to approximately $370.49 billion in 2026, continuing to rise to $446.98 billion by 2029. Such developments suggest a robust economic trajectory that aligns with national developmental goals.
Operational since early 2024, the Dangote Refinery is expected to achieve a processing capacity of 650,000 barrels per day by the first quarter of 2025, producing substantial amounts of gasoline (10.4 million tonnes), diesel (4.6 million tonnes), and aviation fuel (4 million tonnes) annually. Such output is anticipated to bolster Nigeria’s economic infrastructure. The report emphasized that the refinery’s operations will not only enhance fiscal sustainability by generating significant tax revenues but will also create both direct and indirect employment opportunities, encourages job creation, and stimulates sectors linked to oil refining, chemicals, and pharmaceuticals.
The impact of the Dangote Refinery extends beyond domestic production needs; it is expected to reduce Nigeria’s reliance on imported petroleum products, thereby improving the trade balance through increased exports of refined products. This reduction in dependency on imports is significant for a country that has traditionally struggled with balance-of-payment issues. Additionally, the alleviation of fuel subsidies due to local refining capabilities is poised to strengthen Nigeria’s fiscal position, providing essential funds for infrastructure and social development projects, which are crucial for sustainable growth.
The Nigerian government has recognized the strategic necessity of supporting local refineries, exemplified by its recent decision to commence the sale of crude oil to Dangote Refinery and other local refineries in naira as of October 1, 2024. This initiative marks a pivotal shift in the financial framework of the country’s oil sector. According to Wale Edun, the Minister of Finance and Coordinating Minister of the Economy, the transition to selling crude in naira was developed in alignment with directives from the Federal Executive Council. This change is expected to further integrate local operations within the national economy and invigorate investment in domestic oil production.
The initial economic involvement of the government in the refinery project has also evolved. Although the Nigerian National Petroleum Company initially held a 20% stake in the Dangote Refinery, this share has now been reduced to 7.2%, reflecting a broader initiative to privatize and enhance operational efficiency in the oil sector. The execution of such economic strategies is likely to invigorate investments in related sectors, including the upstream and downstream markets, stimulating growth in various industries such as cement manufacturing. With all these initiatives in place, the Dangote Oil Refinery stands as a beacon of promise for economic revitalization and sustainable growth in Nigeria’s future economic landscape.
