The National Petroleum Authority of Ghana (NPA) is proposing to import refined petroleum products from the Dangote Refinery in Nigeria to bolster energy security and enhance regional business collaboration.
Dr. Mustapha Abdul-Hamid, Chief Executive Officer of NPA, shared this plan at the 2024 OTL Africa Downstream Energy Week in Lagos.
Speaking on a panel during the event themed “Alliances for Growth,” Abdul-Hamid emphasized the potential for this move to reduce Ghana’s reliance on costlier imports from Europe and promote West African economic cooperation.
“Importing from Dangote Refinery, with its substantial production capacity, would meet Nigeria’s domestic demand, allowing surplus supply to be exported to Ghana,” Abdul-Hamid explained.
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Ghana has recently expanded its export agreements to supply refined products to Burkina Faso, Mali, and Niger, serving facilities like U.S. military bases. Abdul-Hamid described Ghana’s pipeline deal with Burkina Faso as a model for effective regional partnerships and stressed the importance of regional alliances to improve petroleum supply security.
He highlighted the need for West African nations to pool resources, collaborate on infrastructure, and establish a common currency to stabilize economies across the region. “Pooling human and infrastructure resources across the region can significantly strengthen our economies,” he stated, calling for regulatory alignment within the ECOWAS framework to simplify trade processes.
While the African Continental Free Trade Area (AfCFTA) supports collaboration, Abdul-Hamid noted that foreign exchange issues limit regional trade, as reliance on the U.S. dollar pressures local currencies and raises costs.
“Heavy reliance on the U.S. dollar for petroleum imports places constant pressure on local currencies, raising prices and reducing purchasing power,” he said, advocating for a unified West African currency to mitigate these challenges.
He also highlighted the benefits of a shared pipeline infrastructure over costly and hazardous road transport, citing the Ghana-Burkina Faso pipeline as an example of cost-effective and secure petroleum distribution.
Supporting this vision, Ms. Oluwatosin Aina, Group Head of Energy at First Bank of Nigeria Ltd., echoed Abdul-Hamid’s call for a unified currency. She explained that dollar-denominated transactions drive up operational and product costs, especially with partners like Dangote Refinery and Ghana’s Sentuo Oil Refinery.
“Francophone African countries benefit from stable exchange rates under their shared currency, making them less vulnerable to FX volatility,” Aina observed. “Anglophone nations could adopt a similar approach to strengthen trade and financial stability.”
Aina also highlighted that Nigeria’s fuel subsidy removal has created investment opportunities in the downstream and midstream sectors, making financing for petroleum imports more viable, yet the reliance on dollar transactions strains regional currencies. She urged non-oil export growth to improve foreign exchange inflows and proposed a model akin to the European Union’s euro for stabilizing African markets.
Both Abdul-Hamid and Aina stressed the urgency of unified infrastructure and currency reforms to align fiscal policies, regulatory frameworks, and petroleum infrastructure in West Africa. They asserted that such steps could mitigate currency fluctuations and ensure affordable, stable petroleum prices for the region’s citizens.
