ALIKO DANGOTE’S REFINERY TO TURN THE ECONOMIC FORTUNES OF NIGERIA

Courtesy of africatopsuccess.com

Nigeria is one of the world’s top oil producers, but it doesn’t have enough gasoline to fuel its struggling economy. On the outskirts of Lagos, Nigeria, Aliko Dangote is building what he says is a solution to the country’s fuel crisis. The massive 650,000 barrel-per-day refinery, is designed to transform the country’s crude oil into gasoline for consumers. If his refinery project is successful, Nigeria could also become a major exporter of gasoline and other petroleum products to the region. During construction, the project will employ over 25,000 Nigérians.

Dangote, who is worth $15 billion, said the refinery and petrochemical plant has the potential to satisfy Nigeria’s daily requirement of 445,000 to 550,000 barrels of fuel, with spare capacity to export to neighboring African counties. “This one we are building will satisfy 100% of the [fuel] need of Nigeria,” Dangote told CNNMoney.  The country’s four state-owned refineries are currently operating at just 5% capacity following decades of poor maintenance, mismanagement and corruption. For average citizens, the lack of domestic refining capacity has meant frequent power cuts and eight-hour lines at gas stations. “It is insane. Nigeria produces between 2.2 million and 2.5 million barrels of crude per day, yet is not able to process more than about 100,000 barrels per day.” said Mr. Mansur Ahmed, The Executive Director, Stakeholder Management and Corporate Communications, Dangote Group.

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Meanwhile, plunging crude prices have pushed Africa’s largest economy into recession. According to The Punch, energy accounts for about 35% of Nigeria’s gross domestic product, 75% of government revenue and 90% of export earnings. Dangote, for one, is not worried about low oil prices. “People who own refineries are the best out there, making money. The lower the crude oil price, the more profit that you make in terms of refining margin.” he reveals. At the refinery’s planned oceanfront location, construction is already going on. Pipes have been laid and a massive dredging operation has commenced, but the outline of a refinery has yet to emerge.

“That plant itself is the largest single refinery plant anywhere in the world. In addition to the refinery, we are also going to produce some petrochemical products from the same complex. These are polyethylene and polypropylene”, adds Mr. Mansur Ahmed while speaking to journalists in Abuja. He reveals that, the petrochemical plant which covers 250, 000 hectares of land and is located in the Lekki Free Trade Zone in Lagos, would gulp $14 billion with capacity to refine 650 million barrels of crude oil a day.

He urges the government to deregulate the downstream sector so that investors could play in an open market. “I will not be affected by the decision of local pricing; it is on that concept that we went into refining. We expect that we will buy our input, especially crude, for international market price, and that when we produce products, we will sell those products at international prices.” he suggests.

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In another development, the Dangote group has received $997.4 million in training grant from the U.S. Trade and Development Agency (USTDA) for the Dangote Oil Refining Company Ltd. located in Lekki, Lagos, Nigeria. “USTDA is pleased to support the Dangote Oil Refining Company’s efforts to increase Nigeria’s domestic refining capacity,” said Enoh Titilayo Ebong, USTDA Deputy Director, who signed the grant agreement along with Mr. Aliko Dangote, Chairman and CEO, Dangote Group.  The grant will fund a multi-year program to train more than 100 staff of the Company on refinery fundamentals. Honeywell UOP formally known as Universal Oil Products, with its headquarters in Des Plaines-Illinois, United States, will conduct the training program in Nigeria to maximize the number of trainees, as the scope is focused on refining processes and engineering, as well as on health, safety and environmental skills. Dangote noted that such high technical capital intensive project requires the right human capital to ensure its success. The grant will, therefore, immensely help the company to address this problem.

The company, is already putting competitors on notice. “We certainly are putting a lot of people out of business, both local entrepreneur, local suppliers of product, and major international importers to the country. This will help not only Nigeria but sub-Saharan Africa. There has not been a new refinery for a long time in sub-Saharan Africa.” Dangote said in a telephone interview with Reuters back in 2012.

Since the African economy is expanding rapidly and there exists a dire need to meet up with the excessive fuel demands of the fast-growing population across the continent, Dangote’s refinery comes in handy. However, the extent to which this project would benefit region would only be accurately determined once the refinery goes operational. As for Nigeria, it would be a blistering turning point for Africa’s biggest economy. The project is expected to go operational by the last quarter of 2017. For now, there are reasons to believe that Dangote will meet his goal of bringing the factory online by late 2018.

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