Dangote Refinery makes $1.82bn profit after $2bn 2-year loss

By Adewale Sanyaolu

The Dangote Petroleum Refinery accumulated nearly $2 billion in losses during its first two years of commercial operations before swinging sharply into profitability in the first half of 2026, according to figures contained in its Initial Public Offering (IPO) prospectus.

The refinery lost about $1.51 billion in 2024 and another $475.8 million in 2025, bringing its cumulative losses for the two years to approximately $1.99 billion.

The reversal came in the first six months of 2026, when the refinery posted a profit after tax of $1.82 billion, as higher utilisation, improved refining margins and greater operating efficiency significantly strengthened its financial performance.

Commercial operations began in January 2024, at a time when the refinery was still commissioning and testing some of its units. Its relatively low utilisation during the early stages meant that it had to absorb the substantial fixed costs associated with the $20 billion facility without sufficient throughput to spread those costs across a larger volume of refined products.

Although revenue increased from $7.1 billion in 2024 to $14.2 billion in 2025, the refinery remained loss-making as production was progressively ramped up.

The economics changed substantially in 2026 as utilisation increased. The refinery reached its original 650,000-barrel-per-day nameplate capacity during testing in February and subsequently processed as much as 700,000 barrels per day in June.

Higher throughput enabled the refinery to spread its substantial fixed costs across larger volumes of products while generating significantly higher revenues.

Improved global refining margins also supported the turnaround, with supply disruptions associated with geopolitical conflicts, including the Iran conflict and Russia-Ukraine war, contributing to stronger margins for some refined products.

Revenue reached $13.91 billion in the first half of 2026, almost matching the $14.2 billion generated during the whole of 2025. Profit after tax stood at $1.82 billion, compared with a loss of $475.8 million recorded in the full year 2025.

In naira terms, revenue rose from ₦9.38 trillion in 2024 to ₦18.74 trillion in 2025 and ₦19.13 trillion in the first half of 2026. Profit after tax swung from losses of ₦2.23 trillion in 2024 and ₦723.1 billion in 2025 to a profit of ₦2.50 trillion in the first six months of 2026.

The improved performance was also supported by broader product output and growing exports of petrol, diesel, aviation fuel and other refined products to African and international markets.

Despite the sharp improvement in earnings, the refinery continues to face feedstock and financing risks. About 60 per cent of its crude feedstock came from Nigerian grades in 2025, while the balance was imported.

Under its agreement with NNPC, the refinery has access to up to 350,000 barrels of crude per day, subject to availability, leaving it exposed to domestic crude supply constraints and the need to source additional feedstock internationally.

Dangote plans to expand the refinery’s capacity to 1.4 million barrels per day by 2029 at an estimated cost of $14.27 billion. Its total indebtedness stood at $5.67 billion as of June 30, 2026.

The financial turnaround comes as the refinery seeks to raise fresh capital from the Nigerian equities market to fund its expansion.

The IPO seeks to raise ₦2.15 trillion through the sale of 4.1 billion shares at ₦525 each, with the proceeds expected to support the company’s expansion plans.