The president’s visit comes exactly one week before the end of his second term as leader of Africa’s most populous country. It also comes 45 years after he – as federal commissioner of petroleum resources – completed and commissioned the state-owned 100,000 barrels per day Warri Refinery in Nigeria’s Niger-Delta.
The Dangote Refinery has a capacity of 650,000 barrels per day of crude oil and 900,000 metric tons of polypropylene in a single-train. The single-train system allows for one integrated distillery system that can produce a variety of products.
“We have selected the best plants and equipment and the latest technology from across the world,” Aliko Dangote, the president of Dangote Industries, said during his welcome address.
Foray into refinery
Dangote’s initial foray into the refinery business began in 2007 during the final days of former President Olusegun Obasanjo’s administration. At the time, Dangote led a consortium to buy majority stakes in the Port Harcourt and Kaduna refineries, a deal critics said was wrapped with cronyism.
Obasanjo’s successor, the late Umar Yar’Adua, reversed the sale and returned the refineries to government control.
Dangote said that incident propelled his group to rethink their market entry strategy and business model.
“We subsequently committed to enter the market boldly with a vision to invest in a green field refinery that will transform the industry in Nigeria and Africa as a whole… The facility we are commissioning today is aimed to reposition Nigeria as a key player in the downstream petroleum sector of the global market,” said Dangote.
The investment, valued at $18.5bn, was prompted by a desire to support and contribute to the federal government’s effort to transform the economy and position Nigeria as a leading oil exporter in Africa , said Dangote.
“It is our firm commitment that we will replicate in [oil and gas] what we have achieved in the cement and fertiliser markets, where Nigeria transited from being the largest importer of these two products to a net exporter,” said Dangote.
Our first product will be in the market before the end of July, beginning of August this year
“Beyond today’s ceremony, our first goal is to ramp up production of the various projections to ensure that within this year we are able to fully satisfy our nation’s demand for higher quality products to enable us eliminate the tragedy of import dependency and stop, once and for all, dumping in our market substandard products.
“Our first product will be in the market before the end of July, beginning of August this year,” he said.
Mele Kyari, head of the Nigerian National Petroleum Corporation Limited (NNPC), said the vision behind the refinery and the optimism it generates for a better future is very exciting.
“We will continue to work with investors to develop the hydrocarbon assets using the most modern and innovative technologies to realize the potentials of our resources and power the transition towards clean energy in the decades ahead,” he said.
“I’m delighted to announce that the commercial loan component of the project was financed majorly by our domestic banks, with the balance sourced from foreign banks,” said Godwin Emefiele, the Central Bank Governor.
Around half of the project was financed through equity investment by Dangote. The rest came in the form of debt finance from Nigerian and international banks.
“The Central Bank of Nigeria also partnered with Dangote in ensuring the successful completion of this project by providing over N125bn to cover domestic currency requirements for the venture, while also ensuring the availability of foreign exchange to pay for the importation of some of the plants and machinery being commissioned today,” said Emefiele.
“As of today, total outstanding loans have dropped from over $9bn when this project started to $2.7bn. This reflects the astute credit worthiness and commercial capability of the group and its chairman, Alhaji [Aliko] Dangote.”
Milestone for Nigeria
In his speech, Buhari described the Dangote Refinery as a notable milestone for Nigeria’s economy and a game changer for the downstream petroleum product market in Africa.
“Our economy, which has been stressed for many decades by huge deficits in economic infrastructure and over a decade of insurgency, has also been severely impacted by several external crises including the global financial crisis, the collapse of oil prices, the coronavirus pandemic, and the Russia-Ukraine war,” said the president.
We must create necessary conditions for our private sector to grow and partner with the public sector
“The consequences of these challenges constitute a severe strain on our economy, limiting the government’s ability to provide basic infrastructure without resorting to huge borrowings.
“Our government therefore took the decision to focus attention on creating an enabling environment for the private sector to thrive and fill the enormous gap in investment not only in infrastructure, but also in critical sectors.
“We recognize that without active participation of the private sector and a strong commitment to public-private partnership, our economy will continue to remain severely challenged and our economic growth impeded.”
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