History was made on May 22 as the $18.5 billion Dangote Refinery and Petrochemical Complex in Ibeju-Lekki, Lagos, was commissioned by President Muhammadu Buhari, flanked by some African Presidents and other dignitaries from within and outside Nigeria.
As a country whose growth has been stunted by energy crises, the excitement over the Dangote facility with a nameplate of 650,000 barrels per day oil (plus 900,000 tonnes of polypropylene and three million metric tons of urea annually) was expected.
It stands as the largest single-train refinery in the world and consists of a refinery, petrochemical plant, urea fertiliser plant, and subsea pipeline project.
The refinery is designed to process not only the Bonny Light grade of crude oil, but also a wide variety of other crude streams including many from Africa, some Middle Eastern jurisdictions, and the US Light Tight oil.
It is expected to produce petrol also known as Premium Motor Spirit (PMS), Automotive Gas Oil (Diesel), Aviation Turbine Kerosine (ATK) in line with Euro V Standards.
The overall goal is to meet local demand while positioning the country as a key player in the African and global market.
According to the President and Chief Executive of Dangote Group, Alhaji Aliko Dangote, the first product from the refinery will hit the Nigerian market by July.
Experts describe the refinery as a testament of audacious accomplishments entrepreneurs can achieve if an enabling environment is created for them.
President Buhari at the commissioning said the facility is a game changer, as it is not only capable of solving Nigeria’s energy insufficiency nightmare, but will produce surplus petroleum products for export to earn foreign exchange.
The President described the feat as a significant milestone for the economy and the downstream petroleum products market in the entire African region.
‘‘This mega industry we are commissioning today is a clear example of what can be achieved when entrepreneurs are encouraged and supported and when an enabling environment is created for investments and for businesses to thrive”, he said.
Buhari commended Alhaji Aliko Dangote’s leadership in executing the 650,000 barrels per day refinery, urging other entrepreneurs to emulate his example in driving economic growth and realizing Nigeria’s economic potential.
He stressed the need for African countries to come together, integrate their economies, eliminate trade barriers, and rally their populations to achieve agenda 2063 for the continent’s prosperity.
In his keynote address at the commissioning, the Governor, Central Bank of Nigeria (CBN), Mr Godwin Emefiele, said the $18.5 billion was realised through a contribution of 50 percent equity investment by Dangote and 50 percent debt finance carried out majorly by local banks in Nigeria.
“The Central Bank of Nigeria also partnered, as always, with the Dangote Group in ensuring the successful completion of the project by providing about N125 billion, to cover domestic currency requirements for the venture; while also ensuring the availability of FX to pay for the importation of some of the plants and Machinery.
“We have it on good authority that the Dangote Group has paid down some portion of the commercial loans even before the commissioning of this facility. As at today, total outstanding stands at $2.7 billion”, the CBN Governor stated.
He expressed hopes that under the incoming administration of President Bola Ahmed Tinubu, Nigeria will cease importing petroleum products, fertilizer and petrochemical that drained over US$26 billion in foreign exchange in 2022.
“The self-sufficiency in refined petroleum, urea, and polypropylene, which Nigeria has attained with this project is a strong testament to how leadership, dedication, focus, commitment, and resilience has helped Nigeria in its drive towards import substitution and export orientation.
“This complex will generate thousands of direct jobs and millions of indirect jobs, with over 135,000 permanent jobs. I am also proud to state that the project will generate up to 12,000MW of electricity.
“More importantly, this project avails Nigeria with significant savings both in terms of foreign exchange and in easing the fiscal burden on the Federal Government. Available data at the Central Bank of Nigeria as of 2014, shows that at least 30 percent of the foreign exchange required to meet Nigeria’s import needs went into the importation of refined petroleum products. It is instructive to note, distinguished guests, that according to the balance of payments statistics, the cost (including freight) of petroleum products imports into Nigeria doubled over a five-year period from about US$8.4 billion in 2017 to US$16.2 billion (indicating an annual average of US$11.1 billion), before rising further to US$23.3 billion by end-2022.
“At this rate, the average annual cost of petroleum products imports to Nigeria could reach US$30 billion by 2027 if we continued to rely on petroleum imports. These figures suggest that the refinery could engender foreign exchange savings to the country, of between US$25 billion and US$30 billion annually.
“Aside from the nearly US$30 billion foreign exchange savings from the reduction in petroleum imports, the economy is projected to benefit an extra US$10 billion of foreign exchange inflow annually through the export of refined petroleum products, which will further boost our official reserves and enhance exchange rate stability.
“This project will equally provide support to the fiscal operations of the government as it could help ease budget constraints of funding the petroleum subsidy and engender fiscal savings. The Dangote Refinery is a blessing to Nigeria and Africa as a whole; given that favorable spillovers from this project are also expected to spread from Nigeria to other West African countries and eventually to all countries of the African continent. The recent endeavors of Alhaji Aliko Dangote confirm that Africans have the capacity to drive the continent’s economic integration, growth, and development, rather than depend almost entirely on foreign investors”, Emefiele noted.
He said the apex bank, through its various development finance interventions, has continued to support critical sectors of the Nigerian economy to promote a homegrown rebalancing of the economy and foster self-sufficiency.
Emefiele disclosed that in the last seven years , the CBN has injected over N8 trillion to intervene in different sectors such as agriculture, manufacturing health and education and these have helped in sustaining the current growth trajectory in the Nigerian economy.
Also speaking at the event, the President and Chief Executive of Dangote Group, Alhaji Aliko Dangote, said the project was the fruit of a vision that was conceived over two decades ago, as the company sought to invest in the downstream petroleum sector in response to the increasing shortages of petroleum products and its concomitant negative impacts on the economy and livelihoods.
According to him, the first step was an effort to acquire brownfield refineries under the Federal Government’s Privatization Programme in 2006/7 but the policy was reversed and payment returned.
He added that the dead end of the brownfield outing spurred the company to re-think its market-entry strategy and our business model and ultimately came up with the plan to build a greenfield refinery that will transform the industry in Nigeria and Africa.
“We have selected the best plants and equipment and the latest technologies from across the world.
“Our coastal location and offshore loading and offloading (SPM) facilities with a capacity to receive all our crude oil supplies and evacuate up to 75per cent of our liquid products give us direct access to the rest of Africa and the global market for exports. In addition, 80 per cent of our production can be discharge through trucks nationwide.
“Our huge investment of over $18.5billion in this Industry has been prompted by our desire to support and contribute our quota to the Federal Government’s sustained effort to transform our economy and properly position our country as the leading Nation in Africa, and a respected member among emerging economies in the world. This is the beginning of a great journey, a milestone in a new and exciting trajectory for the downstream sector of Nigeria’s oil and gas industry. It is our firm commitment that we will replicate in this sector, what we have achieved in the cement and fertilizer markets, where Nigeria transited from being the largest importer of these products to a net exporter.
“Our first goal is to ramp up production of the various products to ensure that within this year, we are able to fully satisfy our nation’s demand for high quality products to enable us eliminate the tragedy of import dependency and stop, once and for all, the dumping in our market of toxic sub-standard petroleum products.
“Beyond this, we intend to ensure that our plants are run at the highest capacity utilization and highest efficiency to enable us to export competitively to other markets, especially in the ECOWAS and the wider Africa Region in which 53 Countries out of 55 are dependent on imports to meet their petroleum products demand. This is a clear opportunity for Nigeria given the African Union’s commitment to the creation of an African Common Market through the recently established African Continental Free Trade Area (AFCFTA) regime”, Dangote explained.
Sunnews