…Industry leaders say reliable crude supply, efficient infrastructure and stronger competition are critical to translating domestic refining growth into affordable petrol and diesel for consumers.
Nigeria’s drive to expand domestic refining faces persistent challenges, including unreliable feedstock supply, high freight costs, foreign exchange constraints, and infrastructure gaps, industry leaders have said.
The concerns were raised on Monday at the opening of the 20th edition of OTL Africa Downstream Energy Week in Lagos, where stakeholders called for a more coordinated feedstock strategy and stronger regional cooperation to improve refinery competitiveness and close gaps in petroleum product supply.
Otunba Adetunji Oyebanji, chairman of the OTL Africa Downstream Energy Week Advisory Board, said Africa’s expanding refining capacity offered significant opportunities, but the benefits would depend on securing dependable feedstock, achieving operational efficiency and connecting production to market demand.
He said the continent needed commercially viable energy solutions that reflected local purchasing power, infrastructure limitations and industrial requirements, while improving safety and environmental performance.
Oyebanji added that cleaner fuels, natural gas, renewable energy and changing mobility patterns were increasingly influencing investment decisions across the energy industry.
Although the pace of the transition would vary among countries, he said governments and businesses needed to work together to develop energy systems capable of meeting Africa’s economic and industrial needs.
Feedstock supply remains critical to refinery competitiveness
Oyebanji stressed that investment in refining and other downstream infrastructure would deliver limited benefits without reliable supplies of crude oil and petroleum products, efficient transportation systems and predictable regulatory frameworks.
“A refinery needs dependable feedstock and customers; a storage terminal needs efficient transport; and every investment needs rules that sustain confidence,” he said.
He noted that some African markets remained heavily dependent on imports, while uneven infrastructure and foreign exchange constraints continued to complicate petroleum product trading.
According to him, investment in additional capacity had not automatically translated into affordable energy supplies across the continent.
“There is much still to address. Some markets remain heavily import dependent, infrastructure is uneven, and foreign exchange constraints continue to complicate trade. Investment has not everywhere translated into affordable supply,” he said.
However, he maintained that the progress recorded across the sector provided grounds for cautious optimism, provided stakeholders acknowledged the remaining challenges and pursued practical solutions.
The remarks highlight a central issue for Nigeria’s downstream market: expanding refining capacity must be matched by dependable crude supply, efficient distribution and competitive pricing if domestic production is to reduce the economy’s exposure to imported petroleum products.
High freight costs increase pressure on African energy markets
Oyebanji also pointed to international shipping costs and pressure on diesel supplies as factors complicating the economics of petroleum product trading.
Citing an October assessment by the International Energy Agency, he said elevated freight costs and pressure on diesel supplies were increasing the financial burden on African businesses.
He explained that the effects extended beyond crude oil prices, with access to suitable tankers, marine insurance, trade finance and reliable supply partners becoming increasingly important in determining whether petroleum products could reach markets on time.
Higher transportation and financing costs can increase working-capital requirements for importers and distributors, complicating supply planning and potentially adding to the cost of delivering products to consumers.
Oyebanji said businesses needed to assess market conditions carefully, understand policy direction and identify reliable partners before committing scarce capital to new projects.
Governments, he added, required a clear understanding of the conditions under which investment could translate into dependable services and better outcomes for consumers.
OTL Africa focuses on regional integration and market competition
Oyebanji said the conference programme was designed to address the policy, commercial and operational issues shaping Africa’s downstream petroleum industry.
The Regulatory Convergence and West African Fuels Congress sessions will examine how national regulatory frameworks and regional markets can work more effectively together.
Other sessions will focus on African energy market integration, emerging business opportunities, feedstock strategy, refinery competitiveness, future retail fuel station models and changing consumer behaviour.
Discussions on scaling energy options will also examine natural gas, renewable energy, processing capacity and supporting infrastructure.
Oyebanji expressed confidence that competition in Nigeria’s reformed downstream market could help address the balance between investment, market power and consumer protection.
He said the discussions would help industry participants identify commercially sustainable approaches to expanding supply, improving efficiency and strengthening regional energy security.
Sanwo-Olu: Refining growth must deliver affordable fuel
Lagos State Governor Babajide Sanwo-Olu said Nigeria’s downstream petroleum industry had changed significantly since the removal of petrol subsidies opened greater opportunities for private investment.
However, he cautioned that increased domestic refining and reduced import dependence should not be treated as the ultimate measures of success if households and businesses continued to face high energy costs.
Sanwo-Olu cited data from the petroleum regulator showing that the Dangote Petroleum Refinery produced approximately 42 million litres of petrol daily in August, while petrol imports declined by 26 per cent to about 14.6 million litres per day during the same month.
He said the figures demonstrated a significant shift for a country that had previously relied heavily on imported petrol to meet domestic demand.
“But a refinery’s output is not the final measure of success. The measure is whether product is available where and when Nigerians need it, and what they pay for it,” the governor said.
He added that government and industry stakeholders needed to continue working towards a downstream market that was reliable, competitive and affordable.
The governor’s remarks underscored the distinction between increasing domestic production and achieving tangible benefits for consumers. Even as local refining reduces reliance on imported products, retail prices and availability remain influenced by feedstock costs, logistics, financing, distribution efficiency and market competition.
Nigeria’s downstream reforms face a consumer affordability test
The discussions at OTL Africa Downstream Energy Week reflect the broader challenge facing Nigeria as it seeks to establish a more self-sufficient and competitive petroleum industry.
The expansion of private refining capacity creates opportunities to reduce imports, strengthen domestic supply chains and develop Nigeria’s position as a regional supplier of petroleum products. However, those gains depend on the availability of crude oil, the reliability of refinery operations and the efficiency of transportation and distribution networks.
For investors, predictable regulation, access to finance and commercially sustainable pricing remain important considerations in deciding where to deploy capital.
For consumers, the critical test is whether these investments translate into more reliable supplies and lower or more stable energy costs.
As African countries pursue refinery expansion alongside investments in gas and renewable energy, industry leaders at the Lagos conference called for stronger cooperation between governments, regulators, producers, refiners and distributors to ensure that increased capacity delivers measurable economic benefits.
The 20th edition of OTL Africa Downstream Energy Week is being held in Lagos under the theme “Secure Energy, Shared Prosperity.”