The refinery said the milestone was achieved after optimising its Crude Distillation Unit and petrol production lines, and it is now undergoing a 72-hour performance test with technology partner UOP to confirm stability.
For decades, Nigeria has relied almost entirely on imported petrol, diesel and aviation fuel. These imports have cost the country billions of dollars each year, placing persistent pressure on the naira and deepening shortages across both the official and parallel markets.
With Dangote now producing at full scale, the country is finally beginning to see a structural shift in FX demand.
The Dangote effect on the Naira
Market data shows that as of 11 February, the naira traded at N1,348 on the Nigerian Foreign Exchange Market (NFEM) and had settled at N1,364 to the dollar in the official market the previous week.
Analysts say the refinery’s output, now nearing 700,000 barrels per day, is already helping reduce the foreign exchange demand previously used to fund petroleum imports, a phenomenon investors are calling the “Dangote Effect.”
While the naira is currently strong in early 2026, supported by external inflows and policy adjustments, market participants remain cautious.
Any shortfall in dollar injections from the Central Bank could widen spreads in the parallel market, creating pressure on the official rate. Nevertheless, many observers are cautiously optimistic that the refinery’s operations, alongside ongoing policy measures, can help maintain stability despite global forex volatility.
Billionaire investor Femi Otedola echoed this optimism, describing the refinery’s full-capacity achievement as transformational for Nigeria and Africa.
Writing on X, he noted that domestic refining could ease FX pressures and suggested the naira could strengthen meaningfully, with rates below N1,000 to the dollar increasingly within reach. While his view is bullish, it clearly shows growing confidence that the refinery represents a durable, structural shift rather than a short-term fix.
“Supplying up to 75 million litres of PMS daily changes our energy narrative and conserving foreign exchange. With domestic refining now firmly underway after decades of reliance on imports, pressure on the foreign exchange market should ease significantly. I am optimistic that the naira will strengthen meaningfully, and trading below ₦1,000/$1 before year-end is increasingly within reach.”
Beyond fuel: Industrial and economic implications
The refinery’s impact goes beyond petroleum. Dangote has already begun a $12 billion expansion to increase capacity to 1.4 million barrels per day and add large-scale petrochemical production.
This includes 2.4 million tonnes of polypropylene and 400,000 metric tonnes of Linear Alkyl Benzene annually, materials central to plastics, packaging and cleaning products that Nigeria currently imports in large volumes. Producing them locally could further reduce FX demand from manufacturers while supporting industrial growth.
The full impact on the naira will depend on several factors: the stability of crude supply to the refinery, fiscal and monetary policy, global oil prices, and investor confidence. Yet for the first time in many years, Nigeria has a functioning mega-refinery operating at full capacity, providing a tangible path to reduce one of the economy’s largest sources of FX strain.
For now, what stands out is that industrial capacity is finally meeting domestic economic needs. Market sentiment, supported by data and early investor optimism, suggests the naira could benefit significantly from this structural shift, even as global uncertainties remain.
