Ghana plans to buy petroleum products from the Dangote refinery "to reduce prices".

Ghana could soon be turning to Nigeria's Dangote oil refinery for its petroleum products, a move that would reduce costly imports from Europe. Mustapha Abdul-Hamid, chairman of Ghana's National Petroleum Authority, said on Monday that the move could put an end to monthly fuel imports worth $400 million, currently shipped from Europe. The statement was made at the OTL Africa Downstream conference in Lagos.

The Dangote refinery, which is expected to have a production capacity of 650,000 barrels per day, would offer a more cost-effective solution for Ghana, which would be able to source its fuel needs directly from Nigeria, rather than relying on costly imports from Rotterdam. Abdul-Hamid pointed out that this geographical proximity would reduce transport costs, which should eventually be reflected in the price of fuel and other consumer goods in Ghana.

"If the refinery reaches a capacity of 650,000 barrels a day, all that volume cannot be consumed by Nigeria alone. Instead of importing as we do now from Rotterdam, it will be much easier for us to import from Nigeria, and I think that will bring our prices down," Hamid told the conference.

The Dangote refinery, built by Nigerian billionaire Aliko Dangote, is currently in the start-up phase and is expected to reach full capacity by the end of 2024. Analysts estimate that it could be fully operational by the first quarter of 2025, which could mark a turning point for African oil markets.

According to Hamid, importing petroleum products from Nigeria would not only reduce fuel prices in Ghana, but would also have a positive effect on other sectors of the economy. By lowering transport costs, this initiative could lead to a reduction in the price of goods and services throughout the country.

He also raised the possibility that African countries might eventually reach agreement on the use of a common currency, which would help to curb demand for dollars and further stabilise regional economies.

Ghana, whose economy grew by 6.9% in the second quarter of 2024, mainly driven by the expansion of the extractive sector, is seeing a parallel increase in demand for fuel. By turning to a regional supply solution, the country could benefit from greater economic stability and reduced dependence on European markets for its fuel needs.

The Dangote refinery, the largest in Africa, represents a strategic opportunity for several countries on the continent, including Ghana. By relying on this regional infrastructure, African countries could reduce their dependence on international suppliers and boost intra-African trade in the energy sector.

This development could also foster economic integration within the region and help stabilise fuel prices, a key factor in the growth of local economies. Ghana, in particular, could see its energy bill fall, with positive repercussions for the industrial and extractive sectors that drive its booming economy.