Ghana to Import Petroleum from Nigeria’s Dangote Refinery

By Ibrahim Umar,

Kanempress News,

29th October 2024

The National Petroleum Authority of Ghana (NPAG) has announced its proposal to import refined petroleum products from Nigeria’s Dangote Refinery, a strategic move aimed at bolstering energy security and enhancing regional business cooperation. This announcement was made by the Chief Executive Officer of NPAG, Dr. Mustapha Abdul-Hamid, during the 2024 OTL Africa Downstream Energy Week in Lagos.

Speaking as a panelist at the event, Abdul-Hamid emphasized that this initiative aims to strengthen Ghana’s energy security and deepen regional economic cooperation. The 2024 OTL 18th edition, themed ‘Alliances for Growth’, provided a platform for this significant revelation.

Abdul-Hamid disclosed that Ghana is negotiating an agreement with Dangote Refinery to reduce its reliance on more expensive imports from Rotterdam. He noted that Ghana has also expanded its export agreements to include Burkina Faso, Mali, and Niger, supplying international operational facilities, including U.S. military bases.

“The Dangote Refinery, with its large-scale output, is expected to meet Nigeria’s domestic demand, enabling excess production to be exported to Ghana,” he stated.

Highlighting Ghana’s pipeline agreement with Burkina Faso as a model of effective regional cooperation, Abdul-Hamid called for stronger partnerships to bolster petroleum supply and security. He underscored the importance of a unified currency, enhanced infrastructure, and collaborative efforts to address West Africa’s energy challenges.

Abdul-Hamid stressed that resource-sharing is crucial for economic stability, as no African nation can achieve sustainable growth in isolation. “Pooling human and infrastructure resources across the region can significantly strengthen our economies,” he remarked.

He proposed aligning regulatory policies within the ECOWAS framework to foster seamless trade, while also acknowledging the challenges posed by foreign exchange (FX) issues to intra-regional trade. Heavy reliance on the U.S. dollar for petroleum imports, he explained, exerts constant pressure on local currencies, raising prices and reducing purchasing power.

Abdul-Hamid suggested a common West African currency to mitigate FX volatility and stabilize regional economies. He emphasized the need for unified investments in infrastructure to lower transportation costs and improve distribution within the region, citing the Ghana-Burkina Faso pipeline agreement as a safer and more cost-effective alternative to road transport.

Ghana has introduced regulatory policies allowing marketers to share storage facilities, promoting cooperation and economic stability. “This reform supports alliances among importers, enhancing business success and broader economic stability,” he added.

Ms. Oluwatoyin Aina, Group Head of Energy at First Bank of Nigeria Ltd., echoed Abdul-Hamid’s call for a unified African currency. She noted that dollar-based transactions inflate operational and product costs across the continent. Aina explained that petroleum transactions with Dangote Refinery and Ghana’s Sentuo Oil Refinery must be dollar-based, as no African refinery will sell Premium Motor Spirit (PMS) in local currencies.

She highlighted that the end of Nigeria’s fuel subsidy has created new investment opportunities in downstream and midstream sectors, making it easier for banks to fund petroleum imports. However, dollar-denominated transactions continue to strain the naira and other regional currencies, prompting a call for strengthened non-oil exports to improve FX inflows.

Aina suggested that West African nations could adopt a model similar to the European Union’s common currency, the euro, to stabilize African markets. She noted that Francophone African countries benefit from stable exchange rates under their shared currency, making them less vulnerable to FX volatility. “Anglophone nations could adopt a similar approach to strengthen trade and financial stability,” she said.

Abdul-Hamid and Aina emphasized the urgent need for unified infrastructure and currency reforms. They concluded that by aligning fiscal policies, petroleum infrastructure, and regulatory frameworks, West African nations could address currency challenges and ensure affordable, stable petroleum pricing for their citizens.