Dangote Petroleum Refinery driving Nigeria’s economic recovery, says S&P

*Nigeria’s recent sovereign credit rating upgrade by S&P Global Ratings indicates S&P, the Dangote Petroleum Refinery’s full capacity operations are helping to strengthen the country’s current account surplus, reduce dependence on imported refined petroleum products, and improve foreign exchange liquidity

Isola Moses | ConsumerConnect

The Dangote Petroleum Refinery and Petrochemicals Limited, Lagos, is emerging as a major driver of Nigeria’s improving economic outlook, following the country’s sovereign credit rating upgrade by S&P Global Ratings.

In the firm’s latest assessment, S&P upgraded Nigeria’s long-term foreign and local currency sovereign credit ratings to “B” from “B-”, citing stronger economic growth, improved external balances, rising oil production, and expanded domestic refining capacity as key factors supporting the country’s recovery.

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The global ratings agency specifically identified the operational ramp up of the 650,000 barrels per day (bpd) Dangote Petroleum Refinery and 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.

The report stated in part: “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 projected that Nigeria’s current account surplus would improve to 5.8 percent of GDP in 2026 from 4.8 percent in 2025, supported partly by increased domestic refining and hydrocarbon exports.

The report also indicated that Dangote Refinery is helping to ensure the availability of refined fuel, gas, and fertiliser for the domestic market, while providing a buffer against global supply disruptions triggered by ongoing geopolitical tensions in the Middle East.

The international rating 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 (Forex) 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.

S&P report as well highlighted the Refinery’s broader role in supporting Africa’s industrialisation ambitions.

It noted 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 the Nigerian economy and deliver additional gains to the country’s balance of payments position over the next few years.

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.

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