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Massive Nigeria refinery aims to end fuel shortages

STORY: Nigeria on Monday (May 22) commissioned the massive Dangote refinery - funded by Africa's richest man.

The aim is to transform the country into a net exporter of petroleum products.

But analysts are warning that feeding the massive petrochemical complex with a constant supply of crude, could be a problem.

For President Muhammadu Buhari, the Dangote refinery is the answer to Nigeria's repeated fuel shortages - the latest of which hit in the run-up to February's disputed elections.

$23.3 billion was spent last year on petroleum product imports and around 33 million liters of petrol are consumed each day.

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The refinery plans to produce 53 million liters per day.

Surplus petrol would be exported, turning Africa's biggest oil producer into an export hub for petroleum products.

Speaking at the commissioning ceremony, Aliko Dangote said the priority is to ramp up production:

"... to ensure that within this year we are able to fully satisfy our nation’s demand for higher quality product, to enable us eliminate the tragedy of import dependency, and stop once and for all the dumping in our markets of toxic substandard petroleum products."

But there could be a hurdle.

Nigeria's oil production has been declining due to theft, vandalism of pipelines and underinvestment.

According to economist Kelvin Emmanuel, lower production could limit state-owned oil company NNPC's ability to fulfil an agreement to supply Dangote refinery with 300,000 barrels per day of crude.

‘"The impact of NNPC failing is that it is going to be relying on international oil traders who are bringing in oil and selling to him in FX, yeah. If you sell oil to him in FX and he refines, he is going to be selling petrol to you in FX. Prices are going to go up."

Monday's ceremony was attended by Buhari and four other presidents from the region.

The complex also features a 435-megawatt power station, a deep seaport and fertilizer unit.