N6trn Savings, Rising Refining Capacity Signal Downstream Revival—NMDPRA

Nigeria’s downstream petroleum sector is showing early but unmistakable signs of a historic revival, driven by bold economic reforms, expanding domestic refining capacity, and a regulatory framework designed to restore market confidence and attract long-term investment.

This outlook was articulated by the Authority Chief Executive of the Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA), Saidu Mohammed, at the 2026 Nigerian International Energy Summit (NIES), where he delivered a keynote address on “Driving Nigeria’s Downstream Renaissance: Regulation, Investment, and Market Confidence.”

For decades, Nigeria’s downstream value chain was defined by persistent fuel scarcity, weak infrastructure, import dependency, poor safety records, and regulatory uncertainty.

According to Mohammed, those challenges are now being systematically dismantled under the Petroleum Industry Act (PIA) 2021 and the far-reaching economic reforms of President Bola Tinubu.

“In just a few years of implementing the new legal framework, Nigeria’s downstream sector has evolved into a fully liberalised market,” he said. “The sector is no longer defined by scarcity and supply uncertainty. Supply stability is now the norm, pricing is increasingly driven by market fundamentals, and the environment required to encourage investment is taking shape.”

One of the most striking indicators of this transformation is the estimated over N6tn in fiscal savings recorded within the first nine months of 2025, largely attributed to the full deregulation of the downstream sector, harmonisation of the foreign exchange market, deeper utilisation of gas, and the trading of crude oil and petroleum products in naira.

These reforms have significantly reduced the economic losses historically associated with fuel imports.

At the centre of Nigeria’s downstream resurgence stands the Dangote Petroleum Refinery, the world’s largest single-train refinery with an installed capacity of 650,000 barrels per day.

Mohammed described the facility as a critical stabiliser of domestic supply, noting that it currently meets a significant portion and in some cases, all of Nigeria’s demand for key petroleum products.

“The optimal operationalisation and future upscaling of the Dangote Refinery are essential to achieving Nigeria’s aspiration of becoming a regional and continental energy hub,” he said.

Beyond Dangote, the NMDPRA chief expressed optimism about the medium-term outlook for Nigeria’s refining capacity.

He disclosed that multiple licensed refineries are at various stages of development, while the ongoing rehabilitation of Nigerian National Petroleum Company Limited (NNPCL) refineries is expected to lift the country’s total installed refining capacity to well over one million barrels per day in the medium term.

The downstream transformation, Mohammed stressed, is also being reinforced by an evolving supply chain landscape.

Increased domestic refining, expanding gas-based alternative fuels, improved logistics, and growing private sector participation are steadily reducing Nigeria’s long-standing dependence on imported petroleum products.

Gas, in particular, is emerging as a strategic pillar of the new energy mix. Mohammed said government and industry efforts under Nigeria’s “Decade of Gas” initiative are focused not just on increasing volumes, but on unlocking gas for industrial development, cleaner power generation, transportation fuels, and manufacturing linkages that can broaden economic impact and drive sustainable growth.

However, he cautioned that infrastructure alone cannot deliver a renaissance.

“Markets only flourish where rules are clear, institutions are credible, and investors trust the system,” Mohammed said, underscoring the central role of regulation in sustaining downstream reforms.

Under the PIA, the NMDPRA has shifted from discretionary controls to predictable, rule-based oversight covering licensing, tariffs, product quality, open access, and market conduct.

The Authority’s regulatory philosophy, he said, is anchored on enabling value rather than inhibiting it—creating a level playing field where competition, not administrative intervention, drives efficiency.

The downstream revival, Mohammed noted, cannot be funded by the public sector alone. It requires sustained flows of private capital, both local and international into refineries, depots, pipelines, retail networks, gas infrastructure, and emerging energy value chains.

To de-risk such investments, the regulator is prioritising licensing efficiency, commercially viable frameworks, and enhanced market transparency through credible data availability.

Ultimately, Mohammed emphasised that market confidence is the true currency of reform.

“Investors invest where contracts are respected. Operators expand where rules are stable. Consumers trust systems that are fair and predictable,” he said.

He concluded by calling for sustained collaboration among government, regulators, investors, operators, financiers, and consumers to consolidate the gains already made and ensure Nigeria’s midstream and downstream petroleum sector remains competitive, resilient, and attractive positioning the country as a leader in Africa’s evolving energy ecosystem.

ENDS