The refinery exemplifies initiative and determination
Barring any unforeseen circumstances, President Muhammadu Buhari will this morning in Ibeju-Lekki, Lagos, inaugurate the over $19 billion Dangote Refinery. It is reputed to be the world’s largest single-train petroleum refining facility. Although it has been in the works for almost a decade, the game-changing petroleum refining plant which sits atop over 2,635 hectares of land, is projected to meet the country’s total daily liquid products’ requirement. These products include petrol, diesel, jet fuel and polypropylene, and harbours loading facilities that could accommodate 2,900 tankers as well as spur the building of housing units capable of accommodating 33,000 people.
We must commend Alhaji Aliko Dangote for seeing through this significant project. No sector exemplifies the failure of Nigeria more than the oil and gas industry. Aside from having to contend with wasting trillions of Naira annually on subsidy payments, a resurgence of fuel queues in major cities across the country has exposed the mess in the sector. This has led to long queues of vehicles at fuel stations, with the attendant traffic snarls slowing down commercial and social activities in major cities across the country. The expectation now is that the Dangote refinery will at least guarantee fuel availability and free the foreign exchange hitherto used in subsidy payment for other development.
With a capacity to process 650,000 barrels of crude oil per day and the presence of a 900 KTPA polypropylene plant, the Dangote Refinery showcases what Nigerians can achieve with a bit of grit and determination. It is also a testament to the foresight of Dangote. In fact, the Nigerian Economic Summit Group (NESG), one of Africa’s leading think-tanks, has projected that the plant could create a $21 billion market for Nigeria’s crude oil. If things go as planned, according to the NESG, the Dangote Refinery is set to reshape Nigeria’s economy and position the nation as a global energy player as it will involve export to the West African sub-region in the first instance.
Nigeria has long relied on imported refined petroleum products, resulting in economic vulnerability and dependency. But that paradigm is likely to shift with the plant set for inauguration today. Although industry experts have argued that local refining will not markedly affect the price of products, the sheer magnitude of the facility and the expected trickle-down effect in terms of job creation cannot be downplayed. With an integrated power plant within the refinery which has a capacity of 435mw, exceeding the total power requirement of Ibadan Distribution Company (Disco), even for the pessimist, the Dangote refinery remains the single most significant piece of infrastructure Nigeria has witnessed in years.
Africa’s richest man and owner of the Dangote Refinery, Aliko Dangote, believes that Nigeria could save up to $10 billion in foreign exchange and generate another $10 billion in exports when the facility begins operation. As currently constituted, Dangote says Nigeria’s economy has largely been built around the extraction and exportation of its natural wealth, stressing that Nigeria currently imports over 90 per cent of its refined petroleum products, which amounted to roughly $10 billion in imports in 2022. He believes that while this has brought major benefits to many businesses, more prosperity could be created by locally refining Nigeria’s resources.
Over the years, hundreds of billions of Naira have been spent on Turn Around Maintenance (TAM) of the four public refineries by the NNPC. Yet, none of them worked up to their capacity at any time. With the Dangote refinery, it will be difficult to justify pumping billions of Naira to maintain refineries that offer no value and have become expensive cost centres.