Dangote Refinery Plc has commenced production of petrol, marking a significant milestone for Africa's largest refinery after delays due to recent crude shortages.

The refinery, built by Africa's richest man, billionaire Aliko Dangote, began operations in January, initially producing naphtha and jet fuel.

The Nigerian National Petroleum Corporation (NNPC), which has been struggling to meet local fuel demand, will be the sole buyer of the gasoline processed by the Dangote Refinery.

The NNPC disclosed on Sunday to be under severe financial strain, owing $6 billion to oil traders for supplies since January.

The debt burden has impacted its ability to maintain a steady supply of fuel in the local market, resulting in persistent fuel queues since July and a sharp 45% increase in fuel prices from the official rate of N617 ($0.3942), following the removal of subsidy May 29, 2023 by President Bola Tinubu.

The $20 billion Dangote Refinery, located on the outskirts of Lagos, has the capacity of 650,000 barrels per day and is poised to significantly reduce Nigeria's dependency on imported oil products.

Director for Sub-Saharan Africa at political risk consultancy Horizon Engage, Clementine Wallop, noted the refinery's petrol production could not have come at a more critical time.

"The news that Dangote is processing gasoline couldn't come at a more crucial time given NNPC's statement about its difficulties securing imported supply due to financial strain," she stated.

"This prompts the question of how NNPC will manage purchasing from Dangote, and impresses the need for greater transparency in its finances," Wallop said.

The Dangote Refinery's gasoline production is expected to alleviate some of the supply challenges faced by the NNPC.