BUSINESS COVID-19 pushes Dangote Refinery’s completion date to 2021
As a result of the COVID-19 pandemic, the completion date for Dangote refinery, which was at 75 per cent in March 2020, has been moved to the second half of 2021, Daily Trust on Sunday has learnt. The facility was initially projected to be ready by 2020.
When completed, the refinery, which is situated on 6,180 acres (2,500 hectares) of land at the Lekki Free Zone, Lagos, is expected to become the biggest in Africa. It is expected to process 650,000 barrels of crude oil per day into refined petroleum products.
Nigeria currently imports majority of its refined petroleum products due to lack of refining capacity. With the Dangote facility, Nigeria’s refining capacity will double and help in meeting the increasing demand for fuel, as well as save cost.
The refinery’s location, which is along the coast of the Atlantic Ocean, will allow for smooth shipment of refined products to international markets and ultimately eliminate the overreliance of fuel importation from other regions into Nigeria.
Estimated to cost $18billion, the refinery will produce Euro-V quality gasoline and diesel, as well as jet fuel and polypropylene.
According to Dangote Group, a total of 4,000 direct and 145,000 indirect jobs will be generated at different phases of the project.
International and local contractors like MAN Diesel and Turbo, Schneider Electric, C&I Leasing, Honeywell
But some analysts feared the billionaire may have a near monopoly on Nigeria’s refining sector; hence it is not necessarily a step in the right direction for market liberalisation. They called for the passage of the Petroleum Industry Bill, which has suffered many setbacks in the last 13 years
UOP and Air Liquide Engineering and Construction have benefitted from building the refinery.
Similarly, the high unemployment rate in Nigeria, which is estimated to reach 33.5 per cent this year, will diminish, as the refinery is expected to employ citizens of the country, especially young people.
Pascal Ebhohimen, an economist/ public policy strategic analyst and former director, Nigerian Deposit Insurance Commission (NDIC), said crude oil accounted for well over 90 per cent of Nigeria’s current annual revenue, so having this refinery in place will surely increase the country’s revenue from oil.
He said Dangote Refinery would also help bring down the pump price of fuel in the local market as marketers would no longer depend on forex to bring in products.
He said although there had been calls for the country to diversify its economy, away from the monolithic oil industry and embrace agriculture, solid mineral etc, currently, oil remains Nigeria’s major economic activity, and there is still a huge market for it in the next 40 years.
He said, “At least, cheaper products will be available in the country instead of importing to feed the refineries.’’
Ailing refineries, unstable crude prices threaten Nigeria’s revenue
Starved of international investments and hit hard by unstable crude prices, the Nigerian oil industry has seen a consistent decline since the Muhammadu Buhari government came on board in May 2015.
Policy inconsistency and regulators’ high handedness have been scaring investors away from the sector, the executive secretary and chief executive director of the Major Oil Marketers Association of Nigeria (MOMAN), Mr Clement Isong said.
Although oil remains the country’s main source of income, accounting for approximately 56 per cent of state revenue and a whopping 85 per cent of export revenue, Nigeria has been recording less revenue since crude prices began to nosedive in 2015.
Nigeria, a member of the Organisation of Petroleum Exporting Countries (OPEC), produces between 1.5 and 2.5 million barrels of crude per day, though it would have done more under the right regulations and international investment.
The decreasing oil revenues have closely followed the fall in global crude prices, according to Dr Afe Mayowa, the president of the Oil and Gas Trainers Association of Nigeria.
Its mid-stream and downstream infrastructures are arguably in a worse shape than upstream production.
The country’s refineries currently operate below the intended 500,000 barrel per day capacity. In October 2018, refining capacity dipped below 11 per cent, according to some industry experts.
Probably not wanting to expend huge resources in state- run refineries, the Buhari administration is looking towards a private refinery built by Aliko Dangote.
But some analysts feared the billionaire may have a near monopoly on Nigeria’s refining sector; hence it is not necessarily a step in the right direction for market liberalisation. They called for the passage of the Petroleum Industry Bill, which has suffered many setbacks in the last 13 years.
Over the years, there have been various reviews of the bill under different administrations. This has affected the oil sector and the country negatively.
If the bill is finally signed into law, it will help in pushing companies and individuals to invest in Nigeria’s oil sector, thereby stimulating growth and increasing government revenues.
The most recent version of the bill was sent for consideration during President Muhammadu Buhari’s first term, but there were disagreements between the lawmakers and the executive, which led to its rejection.
It has been re-presented to the lawmakers, who have promised to work on it, with a view to passing it into law.