By Jeph Ajobaju, Chief Copy Editor
Aliko Dangote’s lofty aim remains ending fuel imports, refining local crude, creating jobs, boosting the economy, and exporting surplus fuel from Africa’s largest market, even though production from his refinery is now shifted from 2020 to 2021.
The richest man in Africa, having concerned up cement production in Nigeria, now has his sights on saving the country billions of naira in foreign exchange by refining crude for both local and international consumption.
Dangote Oil Refinery, the largest of its type in the world, is being built in Lekki, Lagos, and will have a capacity of 650,000 barrels per day (bpd).
It is expected to cost at least $12 billion to complete.
Help from CBN
In January, Dangote got a N75 billion loan from the Central Bank of Nigeria (CBN) to finance his largest and most ambitious project to date.
CBN Governor Godwin Emefiele disclosed that Dangote has invested about 50 per cent of the $9 billion required for the refinery as equity and the balance would come as loans from local and foreign lenders.
The CBN will provide N75 billion as a loan, Emefiele said.
Full capacity in Q2 2021
Dangote Group Executive Director, Devakumar Edwin, explained in Lagos that the refinery will now be ready for commissioning in early 2021, with full capacity reached by the end of the first half of the year.
Nigeria is Africa’s largest crude producer, but lacks refining capacity to meet its own fuel needs. The Dangote refinery, designed to maximise fuel output, will produce enough to allow for a small surplus for export.
It will also be able to send a large volume of diesel and jet fuel to international markets.
“We are confident that we can meet 100 per cent of the requirement of the country, so the balance will go for export,” Edwin enthused.
Dangote plans to take advantage of local crude supply without participating in the crude-for-fuel swap deal managed by the Nigerian National Petroleum Corporation (NNPC), which recently extended the deal for another three years.
“We are going to buy the crude just at the export price and will sell our products at the import price, the crude swap is operating only for the importers of the product,” Edwin explained.
A separate fertiliser plant will produce 3m tonnes a year of urea, enough to meet the current needs of farmers nationwide, and a petrochemicals factory will make a combined 1.3m t/y of polyethylene and polypropylene.
The refinery is expected to absorb 30 per cent of Nigeria’s daily oil production and shift the curve of its import-export.
It is designed to process varieties of crude from sweet to light crude sourced both locally, and abroad. Dangote plans to export its diesel to Europe and fuel to Latin America, Western and Central African markets.
Delivery by road, by sea
Edwin said the refinery will deliver its fuels to consumers through roads and sea ports and will replace all of Nigeria’s fuel imports once fully operational.
Fuels will be delivered in “shuttle” boats to Warri and Calabar, and other deliveries would go in trucks. “We are thinking of investing in vessels. We want to make sure we are not held for ransom by any transport operators,” he added.
Dangote Group is fixing and expanding one of the roads to Lekki – adjacent to Lagos’s financial and business district – while the Lagos state government will build another toll road to aid shipments.
“That’s going to reduce a lot of congestion,” Edwin said.
He insisted that the refinery would virtually eliminate fuel imports from other regions, and “those who are importing today … they can buy from our refinery.”
The company previously said the refinery’s mechanical completion was delayed until 2020, though industry sources stressed last year that fuel output is unlikely before 2022.
The refinery is also constructing facilities to export diesel, refined petroleum, and other fuels to markets including Europe and Latin America aboard vessels as large as suezmax tankers.
It is also designed to be able to produce diesel that meets European winter standards, and will be high quality enough to go to any market, according to Reuters.
“We can export the product all over the world. So there is no need for us to (blindly) compete with the local production,” Edwin said.
Saving cement, saving foreign exchange
Already, the Dangote Group dominates Nigeria’s cement industry, and much of that of Africa.
When the refinery enters production, it will solve many of the structural problems that have plagued Nigeria since it discovered huge quantities of oil 50 years ago.
Because the country exports crude and imports refined products that are subsidised by the state, a plethora of dealers and middlemen has sprung up to make easy fortunes out of the arbitrage opportunities, Financial Times wrote in 2017.
Dangote said his refinery will save Nigeria billions of dollars in foreign exchange and remove the pickings that have benefited generations of entrepreneurs diverted from production to speculation.