By: Nurudeen Dauda
To start with, few days to the end of president Obasanjo’s administration in 2007 he privatized 51% stakes of our moribund Kaduna and Portcourt refineries to a business consortium led by Alh. Aliko Dangote with the aims of resuscitating them by the consortium for local refining, but soon after late president Yar’adua took over power he revoked the transaction.
Sadly to note sixteen years after the refineries remain moribund. Nigerian’s four (4) refineries have an installed capacity of 445,000 per barrel daily productions.
Decades of diversion of budgetary provisions for Turn Around Maintenance (TAM) led to the collapse of all our refineries. The collapse of our refineries brought about the importation of refined products.
The continuous government’s regulations of the sector brings about the infamous “subsidy payments”. “Subsidy payments steadily rose from N351bn in 2005 to N4.39trn in 2022, while N3.6trn was earmarked to fund fuel subsidy for the first six months in 2023”.(Daily Trust Sunday, May 21, 2023).
Many players in the industry believe that government’s regulations of the sector is largely responsible for lack of citing of private refineries in the country despite issuance of many licences to private refinery operators.
The government owned refineries remain shut down and the government continues to pay “trillions” of naira as subsidy with “perennial” fuel scarcity. Industry players resolved that the regulations of the sector and local refining are the only permanent solution to “fuel scarcity” in Nigeria.
Dangote who is very determined to venture into the energy sector built his own refinery from the scratch. It is a 650,000 barrel per day capacity refinery which is more than the combined 445,000 per barrel capacity of our moribund refineries. It is the Africa’s biggest oil refinery and the world’s biggest single-train facility. The 650,000 refinery will be equal to about 120,000 litres per day more than our daily 60,000 litres domestic demand.
Interestingly, the Nigerian government which revoked the sales of its 51% stakes to Dangote Group under president Yar’adua has now under president Buhari bought 20% stakes in Dangote’s owned private refinery which he built from the scratch at $2.76bn. I salute Dangote’s determination and doggedness.
In my thought, it is finally a win-win situation to us Dangote may not have achieved this feat without government’s cooperation. I salute the federal government under president Buhari for giving all the necessary support required.
I also salute the Lagos state government for their support. Public Private Partnership is very important especially in modern economy.
We need many Dangote’s in various sectors of the Nigerian economy for socio-economic development. The refinery will definitely have a positive “impact” on the value of “Naira” against the “Dollars” because it will reduce the “demand” for foreign exchange on refined products. It will make more foreign exchange available.
Dangote Group will in the future increase foreign exchange “supply” to Nigeria through the export of his refined products which is more than our daily requirements. From the federal, state and local governments we need to attract both local and foreign investors with favourable policies in order invest and create jobs to our people.
Many International organizations, economists and experts in oil and Gas industry state the refinery will lead to the following:
(1) The Refinery would help Nigeria’s economic recovery drive;(2) The refinery would help the country improves its current account balance;(3) The refinery will supply over 12 per cent of Africa’s products demand and would bring about a 36 per cent reduction in the importation of petroleum productions into the continent;(4) This project will reverse the huge sum the country spends on foreign exchange. We import about $57 billion worth of different products and export only $50.4bn, so we have to balance that with about $7bn; (5) It will save Nigeria about $9bn a year from importing petroleum products.
(6) It will stimulate economic growth by impacting the country’s balance of payments; (7) The refinery will fuel further growth and development across its value chain, including cosmetics, plastics, textiles etc.;(8) The refinery would revolutionise the oil and gas industry in Nigeria; (9) The refinery, Nigeria could save up to $10 billion in foreign exchange and generate another $10 billion in exports; (10) The refinery’s will create direct and indirect jobs etc.
Key facts about Dangote Refinery:
The Dangote Oil Refinery is expected to produce 650,000 barrels per day (BPD) integrated refinery project, reputed as Africa’s biggest oil refinery and the world’s biggest single-train facility.
A single-train refinery uses an integrated distillation unit or one crude distillation unit to refine crude oil into various petroleum products, as against the use of multiple distillation units by most big refineries.
The refinery covers a land area of approximately 2,635 hectares, which is about six times the size of Victoria Island in Lagos.The pipeline infrastructure at the Dangote Petroleum Refinery is the largest anywhere in the world, with 1,100 kilometers to handle 3 billion Standard Cubic Foot of gas per day. The refinery alone has a 435MW power plant that is able to meet the total power requirement of Ibadan DisCo, covering five states, including Oyo, Ogun, Osun, Kwara and Ekiti.
The refinery will meet 100 per cent of the Nigerian requirement of all refined products and also have a surplus of each of these products for export. It is designed to process Nigerian crude with the ability to also process other crudes. Diesel and gasoline products from the refinery will conform to Euro V specifications.
The refinery design complies with World Bank, US EPA, European emission norms and the Department of Petroleum Resources (DPR) emission/effluent norms.
At full production, the complex will have an annual refining capacity of 10.4 million tonnes of gasoline, in addition to 4.6MT of diesel and 4MT of jet fuel. It will also produce 0.69Mt of polypropylene, 0.24MT of propane, 32,000T of sulphur and 0.5MT of carbon black feed.
The refinery also includes a 440-million-litre water treatment tank farm and a housing estate built for 50,000 staff and their families on site.The refinery would create a market for $1billion per annum of Nigerian crude and foreign exchange savings/earnings of $9.9bn. The complex also includes a fertiliser plant, which uses by-products from the refinery as raw materials. The project is expected to generate 4,000 direct and 145,000 indirect jobs.
The Dangote Oil Refinery is being funded with $3bn equity and $6bn loan capital. A consortium of local and international banks led by the Standard Chartered Bank provided a $3.3bn loan facility. The African Finance Corporation (AFC), the African Development Bank, (AfDB), the African Export-Import Bank (Afreximbank), among others, also provided financial support.
The United States Trade and Development Agency offered a N251.3bn ($0.997m) training grant to develop human resources for operating the refinery. It trained 900 young engineers in refinery operations outside the country, six mechanical engineers at GE University in Italy. Fifty process engineers were also trained by Honeywell/UOP for six months, as well as 50 management trainees for succession.The cost of completion is pegged at $19bn.(Daily Trust, Sunday, May 21,2023).
Kudos to Dangote Group!
Congratulations to all Nigerians!
May God bless Nigeria!