President Muhammadu Buhari commissioned Dangote refinery in the Lekki free zone on May 22, 2023. The refinery is expected to refine about 650,000 barrels per day.
The refinery’s pipeline infrastructure, which spans 1,100 kilometers and can carry 3 billion standard cubic feet of gas daily, is thought to be the largest in the world.
With intentions by the Nigerian government to end the subsidy on gasoline in the second half of the year, the inauguration of the refinery is met with great hopes in the country’s energy sector. In addition, N3.6 trillion was set aside to pay for fuel subsidies for the first half of 2023. Subsidy payments increased significantly from N351 billion in 2005 to N4.39 trillion in 2022.
The government places a lot of faith on the Dangote refinery’s completion in order to stop petroleum imports.
The federal government approved the purchase of a 20% ownership worth $2.76 billion in the Dangote Refinery by the state oil company, NNPC Limited, in 2021, signaling a significant change in policy.
The huge complex was built by Aliko Dangote, the richest man in Africa, and is among Nigeria’s biggest investments overall. It has a deep seaport, a fertilizer plant, and a 435 megawatt power plant.
The refinery is anticipated to have an excess of each of these products for export in addition to meeting 100% of Nigeria’s demand for all refined goods. With the ability to process various crudes, it is intended to process Nigerian crude.
The refinery will generate polypropylene, jet fuel, and gasoline and diesel of Euro-V standard. The administration of the Dangote refinery claims that the design complies with emission/effluent standards set by the Department of Petroleum Resources (DPR), the World Bank, the US EPA, and the European Union.
In addition to the $9.9 billion in foreign exchange revenues, the refinery is anticipated to open up a market for the $1 billion in annual Nigerian crude.
After years of delays, the refinery’s price increased to $19 billion from earlier predictions of between $12 billion and $14 billion.
As we earlier reported here on USAfricaonline.com the refinery is expected to hit its first batch of crude in June 2023. Read more>>
A Pan-African investment research organization named Hawilti stated in a recent report titled “Refineries watch Q4 2022” that the possibility of the new private refinery going into operation might assist redefine the country’s domestic refining capability.
“Both the opening of the Dangote refinery and the rehabilitation of state-owned refineries have the potential to make Nigeria Africa’s biggest refining hub by 2025.
“With all state-run refineries undergoing rehabilitation, Nigeria imports all its petroleum products and heavily subsidizes gasoline. It needs the Dangote Refinery to decrease imports, generate currency savings, fight inflation, and ultimately improve its macroeconomic outlook,” it said.
The refinery is expected to aid Nigeria’s economic recovery once it begins to produce, according to the International Monetary Fund (IMF).
“With crude oil for local refining not subject to the Organisation of Petroleum Exporting Countries (OPEC) quota, the refinery also has the potential to catalyse more domestic crude oil production and boost gross domestic product (GDP),” IMF said.
The refinery, according to Chinyere Almona, Director-General of the Lagos Chamber of Commerce and Industry (LCCI), will save and generate foreign exchange, create jobs, have a beneficial impact on the value of the naira, increase prosperity for the downstream sector, and offer business expansion prospects.
“The LCCI views the refinery’s impact on the Nigerian economy as significant. It will also stimulate economic growth by impacting the country’s balance of payments.
“In addition, the Chamber expects the refinery to fuel further growth and development across its value chain, including cosmetics, plastics, textiles etc,” she said.
Aliko Dangote, the president of the Dangote Group, claimed in an interview for a special issue of the London-based Economist Magazine that once the refinery started operating, Nigeria could save up to $10 billion in foreign exchange and produce an additional $10 billion in exports.
“The refinery’s completion will not only create direct and indirect jobs but will also lead to skills transfer and technology acquisition opportunities that will benefit the downstream sector.
“Moreover, the refinery’s production of critical products like naphtha and polypropylene will stimulate the development of other industries, such as cosmetics, plastics, and textiles.
“Refineries on this scale could save Nigeria up to $10 billion in foreign exchange and generate approximately $10 billion from exports,’’ Mr Dangote said.
Gnassingbé Eyadéma, president of Togo, Macky Sall, Mohamed Bazoum, and Mahamat Déby, president of Senegal, are among those anticipated to attend the ceremony on Monday.
Both Rwandan President Paul Kagame and Ghanaian President Nana Akufo-Addo are anticipated to attend the historic occasion.
