- Ghana is seeking an agreement with Dangote Refinery to reduce reliance on expensive petroleum imports from Rotterdam and enhance energy security.
- NPAG CEO Dr Mustapha Abdul-Hamid emphasised the importance of regional cooperation and a unified currency to address West Africa’s energy challenges.
Ghana is pursuing an agreement with Dangote Refinery to reduce its dependence on costly petroleum imports from Rotterdam. The National Petroleum Authority of Ghana (NPAG) aims to import refined products from Dangote to bolster energy security and foster regional business cooperation.
Dr. Mustapha Abdul-Hamid, CEO of NPAG, announced this initiative during the 2024 OTL Africa Downstream Energy Week in Lagos. He emphasised that the partnership would strengthen Ghana’s energy security and deepen economic ties with neighbouring countries. The “Alliances for Growth” event highlighted the need for collaboration in the energy sector.
Abdul-Hamid noted that Ghana has expanded export agreements to include Burkina Faso, Mali, and Niger, supplying various international operational facilities, including US military bases. He pointed out that the large-scale output of Dangote Refinery is expected to satisfy Nigeria’s domestic demand while providing excess production for Ghana.
Highlighting Ghana’s pipeline agreement with Burkina Faso as a model for practical regional cooperation, Abdul-Hamid called for stronger partnerships to enhance petroleum supply and security. He stressed the necessity of a unified currency and improved infrastructure to address West Africa’s energy challenges.
He proposed resource-sharing among African nations to drive economic stability, noting that no country can achieve sustainable growth in isolation. “Pooling human and infrastructure resources can significantly strengthen our economies,” he stated.
Abdul-Hamid urged West African countries to align their regulatory policies within the ECOWAS framework to facilitate seamless trade. He acknowledged that while the African Continental Free Trade Area (AfCFTA) offers a collaborative platform, foreign exchange (FX) issues hinder intra-regional trade.
He explained that reliance on the US dollar for petroleum imports pressures local currencies, increasing prices and diminishing purchasing power. He proposed a typical West African currency to mitigate FX volatility and stabilise regional economies.
Additionally, he emphasised the need for shared infrastructure investments to lower transportation costs and improve distribution. “Transporting petroleum by road is costly and risky due to hazards like banditry. A shared pipeline infrastructure would be safer and more economical,” he said.
Abdul-Hamid cited the Ghana-Burkina Faso pipeline agreement, which aims to reduce reliance on tanker transport and ensure a consistent supply. He also highlighted regulatory policies that allow marketers to share storage facilities, promoting cooperation and economic stability.
Oluwatosin Aina, Group Head of Energy at First Bank of Nigeria Ltd., supported Abdul-Hamid’s call for a unified African currency, noting that dollar-based transactions inflate operational costs across the continent. She mentioned that transactions between Dangote Refinery and Ghana’s Sentuo Oil Refinery must be dollar-denominated, as no African refinery sells Premium Motor Spirit (PMS) in local currencies.
Aina pointed out that the end of Nigeria’s fuel subsidy has opened new investment opportunities in the downstream and midstream sectors, making it easier for banks to finance petroleum imports. However, she stressed that dollar-denominated transactions continue to strain the naira and other regional currencies, urging strengthened non-oil exports to improve FX inflows.
Abdul-Hamid and Aina highlighted the urgent need for unified infrastructure and currency reforms. By aligning fiscal policies, petroleum infrastructure, and regulatory frameworks, West African nations can address currency challenges and ensure affordable, stable petroleum pricing for their citizens.