Now That Dangote Refinery is Live
May I congratulate Alhaji Aliko Dangote for finally giving birth to a “bouncing” refinery after being in the labour room for a decade. It is heartwarming to learn that father and baby are doing well. Of all the adventures Dangote has embarked upon in his life — starting from his primary school days when, according to him, he was buying sweets with his lunch money and giving them to the maiguard to resell for him — the refinery project is surely the roughest and the toughest. For someone who took a multibillion dollar loan at N160/$ and has had to repay at the prevailing exchange rate per time, the refinery venture is enough to ruin his empire and turn him to a forgotten man. But he survived.
I am also thankful that I am alive to witness history. Since the early 2000s, I have been a fierce advocate of building of refineries in Nigeria, although my agitation was that the government should do it since the private sector was reluctant because of thorny issues around deregulation and subsidy. When Dangote announced in 2013 that he was going to build a refinery, I was over the moon. I celebrated it with an article, ‘The Refinery We’ve Been Praying for’ (THISDAY, September 22, 2013). As at then, he was thinking of 400,000 barrels per day and working with a budget of $9 billion, covering two other petrochemical projects in Edo and Ogun states which were initially in his plans.
I asked him why he would build a refinery despite the failure of the Nigerian government to deregulate the downstream sector. Most private sector investors had said they would not build refineries without deregulation. Dangote replied: “With or without deregulation, there is nothing stopping anyone from building a refinery. I am not a marketer. All I will do is buy crude oil at the market price, refine and sell to marketers at the market price. It is marketers that deal with subsidy. If government continues to subsidise, marketers can buy products from us and then collect the subsidy from government. If not, they can sell to motorists at the market price. It’s not complicated.”
Now that the refinery has taken off, the notion that it will bring down the pump prices of petrol and diesel, etc, needs to be toned down. This notion has been promoted by unionists and activists for decades: that local refining would eliminate subsidy. No, it won’t. Dangote Petroleum Refinery Ltd buys crude oil at the going rates in the international market. It will price its refined products accordingly. You can’t buy raw materials at higher prices and sell the finished products at lower prices. Marketers will buy the products from the refinery and sell to motorists. It is now left for the Nigerian government to decide whether or not to subsidise at the point of purchase by Nigerians.
Dangote reminded me then that when marketers imported petrol from foreign refineries, they bought at market prices over there before claiming subsidy payments from government. He went a step further by saying Nigeria should start focusing on exporting petroleum products. “The way forward is for us to start exporting refined products rather than crude. We will get far much better value that way. In the next five to seven years, we should stop exporting crude altogether. Apart from South Africa, the refining capacity in Sub-Saharan Africa is grossly insufficient. Angola has a refinery that can only handle 30,000 barrels per day, whereas they consume 120,000 barrels,” he said.
While promising that his own refinery could be completed by 2016, he projected that other African countries would be coming “to buy products from our refinery… that is our strategic plan”. A lot of things changed along the line. Costs ballooned and deadlines were shifted various times. I must confess herein that at a stage, I was doubting if the refinery would ever be. This was worsened by unending negative media reports about the hiccups and setbacks. But on January 13, 2024, the refinery finally came alive. Mr Femi Otedola, his billionaire friend, calls it the “eighth wonder of the world”. For those of us who had followed the trajectory for so long, this was indeed momentous.
The stats, as made public by Dangote Refinery, are very impressive: sitting on about 2,635 hectares in the Ibeju-Lekki export-processing zone, the $19 billion facility is the world’s largest single-train 650,000 barrels per day refinery with a polypropylene plant that will produce materials for plastic packaging, plastic parts for machinery as well as fibres and textiles. For comparison, the combined installed capacity of Nigeria’s four sick refineries is 445,000 bpd and it has been so since 1989, when President Ibrahim Babangida inaugurated Port Harcourt II. Both Port Harcourt refineries were built to be