Dangote Group at the weekend announced plans to increase the capacity of its planned petrol refinery by 200,000 barrels per day or 30.76 per cent from the previous 450,000 to 650,000bpd.
A statement by the group on Sunday quoted Alhaji Aliko Dangote, its president and Africa’s richest man, as lamenting a situation where Nigeria’s crude is exported and the country imports refined products.
Dangote spoke of the need to return to the drawing board to ensure that Nigeria as a leading producer of crude oil has local refining capacity, in a bid to reverse the trend.
The refinery being constructed in Lagos, according to the statement, quoting the group’s Executive Director in Charge of Stakeholders Management and Corporate Corporation, Mansur Ahmed, would come on stream in 2017.
Ahmed, who spoke for Dangote at the second African Refiners’ Association Week in South Africa, lamented the continent’s dependence on imported refined petroleum products to support the robust economic growth of the past decade.
He said as the continent continued to enjoy rapid growth, demand for petroleum products would continue to increase.
Ahmed said the refinery was being funded by debt and equity, including a $3 billion commitment from Dangote himself, hinting of the possibility of approaching the capital market in future for additional capital if necessary.
“In the past when we have reached a point where we feel we need to increase capital we have listed,” Ahmed stressed.
The refinery, he continued, 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 subsidy in Nigeria is also an issue.”
Payment for fuel subsidy has remained a source of concern for many over the years as it remains a cesspit of corruption. For example, in 2011, while only N245.96 billion was appropriated, but the Central Bank of Nigeria (CBN) whose job it is to make payments, put the figure at N1.7 trillion.
Worse still, the National Assembly Committee to verify and determine actual payment put payment at N2.587 trillion as at December 31, 2011, even as there was another N500 billion outstanding claims for that year.
The committee also noted that the then Accountant-General paid a total of N127.872 billion to importers through 128 payments of N999 million each within 24 hours between January 12 and 13, 2009.
The project, he believes, will cut reliance on international markets for Nigeria, Africa’s largest oil producer, which imports more than 90 per cent of its fuel needs, lamenting that the lack of sufficient refining capacity is a major handicap for Nigeria’s economy.
He reminded the gathering that “OPEC estimates project that demand in Africa is expected to grow annually at around 1.7 per cent 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.”
Speaking at another forum through his Group Executive Director, Devakumar Edwin, Dangote said the project is buoyed by the successes recorded in such sector as sugar and cement.
Edwin, who received a group of oil and gas stakeholders on a courtesy visit in Lagos at the weekend, said the capacity of the petrochemical plant being developed along with the refinery is being increased by 380 per cent to 3.6 million metric tons from 750,000.
According to him, “the entire petrochemical industry is history. Nobody has started with a 3.6 million tons capacity anywhere in the world. We are doing two million tons of polypropylene and 1.6 tons of polythene, which is approximately 3.6 million tons… 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 tons per annum capacity, today we would have imported about 16 million tons of cement and with that you can imagine if we had imported this, it would have cost the country $2 billion of foreign exchange.
Edwin dismissed fears that change in government policy could affect the business, stressing that “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.
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