S&P Credits Dangote Refinery For Nigeria’s Sovereign Rating Upgrade

S&P Global has attributed its decision to upgrade Nigeria’s sovereign credit rating to the operational success of the Dangote Refinery, saying the privately owned facility has materially reduced the country’s dependence on imported refined petroleum products.

The rating agency highlighted the refinery’s near-full capacity output and its positive effects on foreign exchange savings, fuel supply stability and state revenues as key factors that strengthened Nigeria’s fiscal and external resilience.

In its latest assessment, S&P upgraded Nigeria’s long-term foreign and local currency sovereign credit ratings to “B” from “B-”, citing stronger economic growth, improved external balances, rising oil production, and expanded domestic refining capacity as key factors supporting the country’s recovery.

The global ratings agency specifically identified the operational ramp-up of the 650,000 barrels per day Dangote Petroleum Refinery & Petrochemicals as a major contributor to Nigeria’s improving balance of payments position and broader economic resilience.

According to S&P, the refinery’s full-capacity operations are helping strengthen Nigeria’s current account surplus, reduce dependence on imported refined petroleum products, and improve foreign-exchange liquidity.

“Significant refining capacity is now also online; Dangote Industries Ltd.’s large-scale refinery and petrochemical complex has ramped up to near its maximum capacity of 650,000 barrels per day,” the report stated.

S&P projected that Nigeria’s current account surplus would improve to 5.8 per cent of GDP in 2026 from 4.8 per cent in 2025, supported partly by increased domestic refining and hydrocarbon exports.

The report noted that the refinery is helping to ensure the availability of refined fuel, gas, and fertiliser for the domestic market, while also providing a buffer against global supply disruptions triggered by ongoing geopolitical tensions in the Middle East.

The agency further stated that Nigeria’s improving external position has been supported by reduced fuel import dependence, the removal of fuel subsidies, exchange rate liberalisation, and higher oil production.

Foreign exchange reserves, according to S&P, have risen significantly from about $33 billion in 2023 to nearly $50 billion by early 2026, aided partly by lower import demand for refined petroleum products following the commencement of operations at the Dangote Refinery.

The report also highlighted the refinery’s broader role in supporting Africa’s industrialisation ambitions, noting that Nigeria is transitioning from being primarily a crude oil exporter to an emerging producer and exporter of refined petroleum products.

S&P disclosed that Dangote Industries has already unveiled plans to undertake feasibility studies to expand refining capacity to about 1.4 million barrels per day from the current 650,000 barrels per day.

The agency said the planned expansion, alongside the rehabilitation of other local refineries, could further strengthen Nigeria’s economy and deliver additional gains to the country’s balance of payments position over the next few years.

While acknowledging that global crude oil prices and market driven pricing continue to influence domestic fuel costs, S&P maintained that the increased local refining capacity provides Nigeria with greater energy security and reduced exposure to external supply shocks.

The report also linked Nigeria’s improving macroeconomic outlook to reforms undertaken since 2023, including exchange rate liberalisation, fiscal reforms, higher petroleum revenue remittances, and efforts to improve oil production through enhanced security in the Niger Delta.

S&P said Nigeria’s economic growth is expected to remain firm despite inflationary pressures, with reforms continuing to support investor confidence and non-oil sector expansion.

The stable outlook, according to the agency, reflects a balance between Nigeria’s improving external position and ongoing structural challenges, including a narrow tax base, high inflation, and low formal employment levels.