Aliko Dangote, Africa’s richest man and president of the pan-African conglomerate, Dangote Group, has announced that he is increasing his refinery capacity to process 650, 000 barrels per day. This will make the refinery the single largest stream in the world, and will see Nigeria listed as having the largest petroleum refinery in the world.
Dangote said that though the initial plan was to have 450,000 bed refining capacity, but that he has since gone back to the drawing board to have a bigger plant because he believes that Nigeria as a leading producer of crude oil should also be credited with local refining capacity.
Describing the present situation where Nigeria produces crude but goes abroad to buy refined products as unacceptable, Dangote who spoke through his Group Executive Director, Devakumar Edwin, said that Dangote refinery was ready to reverse the trend just as it has successfully done in other sectors like sugar and cement.
His clarification came even as the Company’s Executive Director in charge of Stakeholders Management and Corporate Corporation, Engr. Mansur Ahmed told stakeholders in South Africa that the refinery would run full swing in 2017.
Edwin who spoke while receiving on behalf of Dangote, a group of oil and gas stakeholders who paid him a visit in Lagos at the weekend, also disclosed that the petrochemicals which is being developed along side the refinery has also had its capacity increased from 750,000 to 3.6 million.
Said he: “The entire petrochemical industry is history. Nobody has started with a 3.6 million tonnes capacity anywhere in the world. We are doing 2 million tonnes of polypropylene and 1.6 tonnes of polythene which is approximately 3.6 million tonnes which is a huge petrochemical complex.
“The consumption of petrochemical products in Nigeria and within Saharan Africa is quite limited today but in the future there will be growth. If the cement industry has not developed like this today, if we were still living with a 3.4 million tonnes per annum capacity, today we would have imported about 16 million tonnes of cement and with that you can imagine if we had imported this, it would have cost the country $2 billion of foreign exchange.
“So that much of foreign exchange has been saved by the country and we can imagine how much billions of dollars the country is spending in importation of petroleum products. That much of enormous foreign exchange has been conserved and the petrochemical products are exported, it will yield a huge amount of foreign exchange for the country even for us today, we are so happy and relieved that our external investment in cement has started to yield returns this year. We will be able to bring back foreign exchange in terms of our earnings from these investments.”
He also dismissed fears that change in government policy could affect the business saying, “we have witnessed so many political upheavals and never had any negative impacts on our business as such because our business is not dependent on any government contracts or any linkage to the government. Fortunately, for the businesses we are in and the way we carry out risk analysis, we go through a rigorous analysis before we carry out any investment. One of the reasons why we carry out this very rigorous risk analysis is because most of the investments come from president’s pocket and because he makes massive investment and obviously, he will not want his investments to be wiped out because of one mistake.”
Meanwhile, Engineer, Mansur Ahmed, who stood in for Dangote at the 2nd African Refiners Association Week lamented the continent’s dependent on imported refined petroleum products to support the robust economic growth of the past decade. He said as the continent continues to enjoy rapid growth, demand for petroleum products can only continue to increase.
“OPEC estimates project that demand for petroleum products in Africa is expected to grow annually at around 1.7% over the next 25 years. With the current state of our refineries, all of this additional demand may have to be imported from outside the continent if urgent steps are not taken to boost African supply.”
He however expressed optimism that the Dangote Refinery, to be located in Lagos, will cut reliance on international markets for Africa’s largest oil producer, which imports more than 90 percent of its fuel needs, noting that the lack of sufficient refining capacity is a major handicap in Africa’s biggest economy.
Ahmed said “The refinery is being designed to process Nigerian crude mix and produce products conforming to Euro V fuel specifications, as fuel demands across the continent are forecast to rise rapidly with many countries enjoying strong economic growth.
Poor infrastructure, competitive global markets and financial constraints have traditionally held back Africa’s refining capacity, while fuel subsidies in Nigeria is also an issue.”
Ahmed said the refinery, which is being funded by debt and equity, including a $3 billion commitment from Dangote himself, could approach the capital market in future should additional capital be needed.
“In the past when we have reached a point where we feel we need to increase capital we have listed,” Ahmed said.
The Dangote Group has interests ranging from cement to basic food processing to oil and gas.
A boost to its refining capacity would be a blow to European refiners and oil traders, which make huge profits bringing gasoline into the country.