Ghana is considering importing fuel from Nigeria's Dangote refinery to reduce its dependence on costly European exports, Mustapha Abdul-Hamid, chairman of Ghana's National Petroleum Authority, spoke at the OTL Africa Downstream conference.
1. A New fuel Import strategy for Ghana
Ghana is considering sourcing its fuel from Nigeria’s Dangote refinery, which could significantly impact its fuel import strategy and economy. According to Mustapha Abdul-Hamid, Chairman of Ghana's National Petroleum Authority, importing from Nigeria would allow Ghana to replace more expensive fuel imports from Europe, a current expenditure that costs Ghana around $400 million per month. This shift could reduce fuel prices, benefiting not only the energy sector but other goods and services, as freight costs from nearby Nigeria are expected to be lower than from Europe.
2. The Dangote Refinery's expanding capacity
The Dangote refinery, spearheaded by Nigerian billionaire Aliko Dangote, is set to operate at close to full capacity by year’s end and is anticipated to reach full operational status by early 2025. With a production capacity of 650,000 barrels per day (bpd), the refinery would produce a surplus beyond Nigeria’s demand. This surplus offers neighboring countries like Ghana a closer, more affordable fuel source compared to imports from Rotterdam, which has been Ghana’s primary supplier. Abdul-Hamid emphasized that shifting to imports from Nigeria aligns with Ghana’s goals of reducing costs and stabilizing local prices by minimizing overseas freight expenses.
3. Regional economic impact
Beyond the immediate fuel import savings, the anticipated change has broader implications for the West African region. Lower fuel import costs could ease inflationary pressure on various sectors within Ghana, making goods and services more affordable and benefiting the country’s economic stability. Additionally, Abdul-Hamid noted that a unified African currency could further strengthen regional trade by reducing dependence on the U.S. dollar, making transactions between African countries more seamless.
4. Supporting Ghana’s growing economy
This transition is part of Ghana’s broader strategy to support its growing economy. With a 6.9% year-on-year growth in the second quarter of 2024, largely driven by the extractive sector, Ghana’s fuel demand has been rising steadily. Meeting this demand through a closer supplier like the Dangote refinery not only supports economic growth but aligns with Ghana's goals for regional trade and price stability. This approach could enhance economic ties across West Africa and position the region as a more integrated energy market, contributing to stability and growth on a continental scale, with information from Reuters.
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