Nigeria’s dirty fuel problem is back in the spotlight, thanks to the row between Dangote refinery, the former national oil company, and government regulators. The public allegations made by both sides are very revealing. This is a short overview of the situation, to highlight how important this issue is, the progress made to date, and why we should all keep tracking fuel quality in Nigeria.
What is happening?
Dangote’s US$20 billion refinery started to operate this year, but the government regulator claimed it is producing fuels that are inferior to imports, due to their high sulphur content. Dangote refuted this allegation, and claimed it “produces the best diesel in Nigeria”. He referenced lab tests by lawmakers that found sulphur content at 88ppm, compared to 1,800-2,000ppm in samples of imported diesel. The regulator refuted this, claiming all diesel imported since June 2024 was below 50ppm in line with the law.
Dangote went further to accuse the Nigerian National Petroleum Company Limited (NNPCL) of issuing licenses to marketers who import “extremely high sulphur diesel from Russia and dump it in the Nigerian market”. He claimed this was a strategy to push Dangote to sell fuels internationally. Dangote also claimed that the NNPCL and international oil companies (IOCs) made it difficult for his refinery to purchase crude oil in Nigeria, by engineering artificial shortages, charging above the international market price, and directing them to international trading arms. Dangote claims this forces them to import oil from the US, Brazil and elsewhere. His company stated that “this is not just business rivalry, it’s economic sabotage”.
Why is this important?
Firstly, high-sulphur fuels are extremely damaging. They create more air pollution, leading to an increase in respiratory diseases and cancers, which contributes to cutting life expectancy by 5 years in the Niger Delta. Thankfully, high sulphur fuels are now illegal in Nigeria, and will need to be regulated better. Under the Petroleum Industry Act (PIA 2021), section 317 requires all imported petroleum products to have a sulphur content below 50ppm (to meet Afri-5 specifications). This follows a long policy push, led by the Climate and Clean Air Coalition (CCAC), to get all ECOWAS members to adopt clean fuel standards. For Nigeria, this was a significant improvement on the previous level of 3,000ppm. However, since many refineries are new or recently refurbished, the regulator has permitted domestic refineries to sell fuels with 650ppm until 2025 so they can settle into the market.
Secondly, the current situation threatens progress made on the dirty fuel situation across West Africa. Earlier this year, Belgium banned exports of dirty fuel to West Africa, following a similar ban by the Netherlands last year. These bans are hugely significant, as both countries were the major sources of dirty fuel dumped in Nigeria. It appears that Dangote is currently forced to sell the high-sulphur products across West Africa, delaying improvements in air quality.
Thirdly, vested interests are preventing progress in Nigeria by allowing dirty fuel imports to continue. This is part of the opaque system controlling oil exports and fuel imports for decades, perpetuating corruption in the fuel subsidy regime. Dangote claimed that officials in the NNPCL are directly involved in lowering fuel quality, by operating a blending plant in Malta, where additives are added so refined fuel can be ‘watered down’ into larger volumes of lower quality, before arriving in Nigeria. While no evidence was provided to pin this on NNPCL staff, an anonymous whistle-blower in the industry got in touch with SDN to confirm that this practice widespread in West Africa, but we did not have resources to investigate further. Dangote referred to these vested interests as the “oil mafia”, claiming they are more dangerous than the drug mafia.
Finally, this issue highlights a broader problem with the business environment in Nigeria, which will further deter investors. Dangote told the press that he is ready to leave the project: “Let them (NNPCL) buy me out and run the refinery the best way they can. They have labelled me a monopolist”. If the refinery project fails, then so do Nigeria’s hopes of quickly reducing fuel shortages and prices. Moreover, if a long-established Nigerian company the size of Dangote cannot do business in Nigeria, then who can? The dirty fuel itself could also turn businesses away, as seen when Volkswagen pulled out of Nigeria because of this issue in 2023.
What does SDN’s research show?
Our research report, Dirty Fuel (2021) analysed fuel samples from Lagos and the Niger Delta. Lab tests showed that the imported fuels sold in Nigeria had extremely high sulphur levels, averging over 2,000ppm for diesel, which is 40 times higher than the new limit, and 429ppm for gasoline, which is 8.5 times higher. We also analysed fuels from the artisanal oil industry, which surprisingly, had significantly lower levels of sulphur than fuel imported to Nigeria, and were generally better quality (i.e. contained the right mix of hydrocarbon chains).
After our research was published, all government agencies associated with regulation of fuels traded blame, and denied responsibility. This highlighted that not only are regulatory standards unclear, but the responsibilities for enforcement are too. Although the Nigerian government took no concrete, our study, as well as an earlier one by Public Eye, spurred international governments into action.
What can be done?
The House of Representatives Committee constituted to investigate this issue should be supported with evidence and testimony. They are looking at alleged importation of dirtier fuels, the operations of standards agencies, why refineries are unable to get adequate crude supplies, and the rising fuel queues due to scarcity.
Regulatory agencies will also need more capacity to monitor and enforce standards. This should be a crucial part of the mandate of the Nigeria Downstream and Midstream Petroleum Regulatory Agency (NDMPRA), and should be adequately funded. Currently, it is claimed that they do not even maintain their own laboratory for testing and rely on third parties, whose labs have questionable standards.
Independent testing should be supported to hold the regulator and marketers accountable to the law on sulphur content. The current saga suggests that the regulators are not being transparent about fuel quality and subsidies, so this should be conducted by a non-government agency.
