Ghana Signs Deal for Petroleum Importation from Nigeria’s Dangote Refinery

The National Petroleum Authority of Ghana (NPAG) has announced plans to import refined petroleum products from Nigeria’s Dangote Refinery as part of an effort to bolster Ghana’s energy security and deepen economic collaboration within West Africa.

Mustapha Abdul-Hamid, CEO of NPAG, shared the development at the 2024 OTL Africa Downstream Energy Week held in Lagos. Speaking as a panelist, Abdul-Hamid highlighted that the proposed imports from Dangote Refinery aim to reduce Ghana’s reliance on higher-cost petroleum imports from Europe and build stronger ties with regional partners.

The 18th edition of the OTL Africa conference, themed “Alliances for Growth,” gathered industry leaders to discuss energy strategies and cross-border cooperation. Abdul-Hamid noted that Ghana is seeking a long-term agreement with Dangote Refinery to ensure a reliable, cost-effective fuel supply and has also extended its energy export footprint to Burkina Faso, Mali, and Niger. These countries are being supplied by Ghana, including U.S. military facilities in the region.

“The Dangote Refinery’s capacity to meet Nigeria’s domestic fuel demands opens up the potential for surplus production to be exported to Ghana and other African nations,” Abdul-Hamid stated.

He further emphasized Ghana’s recently implemented pipeline agreement with Burkina Faso, which serves as a model for effective regional cooperation in the petroleum sector. Abdul-Hamid called for a united approach in West Africa, underscoring the need for a common currency, upgraded infrastructure, and shared resources to address the region’s energy challenges.

“No single African nation can achieve sustainable growth in isolation. Pooling human and infrastructure resources will significantly strengthen our economies,” Abdul-Hamid remarked, advocating for regulatory alignment within the ECOWAS framework to facilitate cross-border trade.

While the African Continental Free Trade Area (AfCFTA) has laid the groundwork for collaboration, Abdul-Hamid acknowledged that heavy reliance on the U.S. dollar for petroleum transactions strains local currencies, raising costs and reducing purchasing power. He proposed adopting a common West African currency to help stabilize regional economies and reduce foreign exchange (FX) volatility.

Abdul-Hamid also addressed the need for shared investments in regional infrastructure, especially for transport. “Moving petroleum by road is costly and poses security risks. A shared pipeline infrastructure would be a safer and more cost-effective solution,” he said, noting the success of Ghana’s pipeline agreement with Burkina Faso in lowering tanker transport dependence.

The NPAG has introduced regulatory reforms in Ghana allowing marketers to share storage facilities, fostering cooperation and economic stability. “This reform supports alliances among importers, enhancing both business success and broader economic stability,” Abdul-Hamid added.

Oluwatosin Aina, Group Head of Energy at First Bank of Nigeria Ltd., echoed Abdul-Hamid’s calls for a unified African currency. Aina explained that dollar-based transactions significantly increase operational and product costs across Africa. She noted that even transactions involving Ghana’s Sentuo Oil Refinery and Nigeria’s Dangote Refinery must be conducted in dollars, as African refineries currently do not offer Premium Motor Spirit (PMS) in local currencies.

Aina pointed out that the end of Nigeria’s fuel subsidy has spurred investment opportunities within the downstream and midstream sectors, making it easier for banks to support petroleum imports. However, she cautioned that dollar-denominated transactions continue to pressure the naira and other West African currencies. She proposed a model similar to the European Union’s common currency, the euro, which has helped stabilize economies in Francophone Africa.

Both Abdul-Hamid and Aina urged swift action on currency and infrastructure reforms. They stressed that by aligning fiscal policies, petroleum infrastructure, and regulatory frameworks, West African nations could mitigate currency pressures and ensure stable, affordable petroleum pricing for citizens across the region.