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A game changer: Dangote’s big gamble finally pays off

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Dangote Refinery to dump Nigerian crude for WTI Midland

...as world’s largest single-train refinery defies all odds

By AYOOLA OLAOLUWA

When in November 2013, Africas’s richest man, Alhaji Aliko Dangote, announced his plans to transform Nigeria into a net exporter of refined petroleum products by building a gigantic refinery in Lagos, many sceptics scoffed at his sheer audacity and the impossibility of pulling off this grandiose task.

They have every reason to be doubtful and cynical. Nigeria, the supposed giant of Africa, is renowned for never getting anything right.

For instance, despite sitting on top of a proven reserves of over 40 billion barrels of crude oil, with billions more yet to be discovered, as well as being Africa’s largest crude oil producer, the nation rely largely on imported refined petroleum products to fuel its vehicles and economy.

Also, in spite of having abundant natural gas, which it sells to African and European countries to power their homes and industries, majority of Nigerians still grope in darkness.

To compound his headache, Nigeria has the enviable record of being a graveyard of ambitious projects and good intentions, frustrated by the twin evils of government bureaucracy and political considerations.

As a result of all these obvious and perceived obstacles and landmines on his part, the Kano-born billionaire was never given a chance of succeeding in his quest of completing a functional refinery in the country.

As if possessed by a self-destructive spirit, Dangote, despite the obvious admonitions and setbacks he faced even before kick-starting the construction of the 300,000 barrels per day capacity refinery, which he had initially planned to build, yet again jolted the the world, especially pessimistic pundits, when he announced the scaling up of the plant refining capacity to 650,000 barrels per day.

Rather than allowing himself to be discouraged, the president of Dangote Group ploughed on, with construction billed to commence in middle 2013.

Unfortunately, construction workers were in the process of being mobilized to site when evil prophesies against the refinery began to manifest.

Plagued by several factors, especially the failure of the Federal Government to put in place an effective support mechanism to take high-impact projects like the Dangote Refinery from the drawing board to completion, construction work did not start until 2017, three whole years after the originally planned takeoff.

The initial delay in construction works was caused by the underestimation of the full works needed to be done to stabilise the project site located in the Lekki Free Trade Zone (LFTZ), which sits on a vast swampland bordered by the Atlantic Ocean.

According to Dangote himself while speaking on the challenge, reclaiming the swampland on which the refinery will sit into a stable surface was one of the biggest obstacles the company encountered, saying he almost regretted choosing the site.

To overcome this challenge, the three biggest dredgers and land reclamation firms in the world had to be brought in to stabilise the land, which required massive excavation and soil stabilization works, as well as piling works which gulped billions of dollars.

After the completion of sand filling and soil reclamation, actual construction works started in 2017.

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The expensive time consuming land reclamation and other inhibiting factors, such as the disruptions caused by the COVID-19 pandemic and forex challenges, inadvertently pushed the initial projected construction cost of between $12billion to $14 billion to about $19billion.

On May 22, 2023, just seven days before former President Muhammadu Buhari left office, he officially commissioned the Dangote Refinery, thanking Dangote for his efforts, while stating that the facility will usher in a new era of fuel self-sufficiency.

However, rather than abate, the refinery faced another problem at completion: unavailability of feed stocks to begin production.

According to sources at Dangote Group, the Nigerian National Petroleum Company (NNPC) Limited, which had committed to supplying the refinery its crude oil needs failed to deliver the feedstock as agreed.

NNPCL, it was gathered, had committed its crude to buyers which it signed forwards contracts with, and as a result could not supply the new refinery as promised for several months.

After a long wait, the Dangote Refinery on December 8, 2023. received the first 1 million barrels of crude oil needed to start initial production.

On Monday, January 8, 2024, the refinery received the sixth crude oil shipment of one million barrels of Agbami crude supplied by the NNPCL, paving the way for it to begin production.

The long wait finally ended on on Friday, January 12, 2024, when the refinery commenced production of refined petroleum products afters 11 years of anxious waiting and expectations.

The Dangote Group confirmed the takeoff of the multi-billion dollar refinery project, Saturday on the social media platform X, formerly Twitter, thanking Nigerians and stakeholders for their support towards the actualization of this project.

The company also assured Nigerians that products from the refinery would hit the market in January after all regulatory approvals are received.

“We thank President Bola Tinubu for his support and for making our dream come true. This production, as witnessed today, would not have been possible without his visionary leadership and prompt attention to details.

“His intervention at various stages cleared all impediments, thereby accelerating the actualization of the project.

“We also thank the NNPC, NUPRC and NMDPRA for their support. These organisations have been our dependable partners in this historic journey.

“We also thank Nigerians for their belief and support in this project. We have started the production of diesel and aviation fuel, and the products will be in the market within this month once we receive regulatory approvals.

“This is a big day for Nigeria. We are delighted to have reached this significant milestone. This is an important achievement for our country as it demonstrates our ability to develop and deliver large capital projects.

“This is a game changer for our country, and I am very fulfilled with the actualisation of this project”, Dangote Group stated.

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Though, the plant is starting with an initial processing of 350,000 barrels of oil per day, it is expected to reach its full capacity of 650,000 barrels per day by June 2024.

When fully operational, the plant, which was designed for 100% Nigerian crude with the flexibility to process other crude grades like the Middle Eastern Arab Light and U.S Light tight oil, is expected to meet one hundred per cent of Nigeria’s requirement of all refined products, including petrol, diesel, kerosene, and aviation jet, apart from turning the nation into a net exporter of refined petroleum products such as aviation fuel, diesel, LPG, PMS and many others.

The refinery, which has a self-sufficient marine facility with the ability to handle the largest vessels globally available, is built to take crude through its two SPMs located 25 kilometres from the shore and to discharge refined petroleum products through three separate SPMs.

It also has the capacity to load 1,900 trucks of refined products daily at its truck-loading gantries.

Designed to comply with U.S EPA, European emission norms, and Department of Petroleum Resources (DPR) emission/effluent norms as well as African Refiners and Distribution Association (ARDA) standards, all products from the Dangote Refinery, the owners claimed, will conform to Euro V specifications.

Speaking on the development, stakeholders described the project as the economic game changer that will lift Nigeria’s stalled economy from the doldrums.

According to the experts, apart from creating about 9,500 direct jobs and 25,000 indirect jobs, Nigeria would be making an annual savings of $26 billion used to import refined petroleum products, petrochemicals and fertilisers, another $10billion in foreign exchange earnings for the country, as well as creating an assured market for Nigerian crude, which are sometimes returned unsold.

A former president of the Nigeria Society of Petroleum Engineers, Joe Nwakwue, said Nigeria would reap enormous benefits from the Dangote refinery with direct jobs and taxes being paid to both the federal and sub-national governments.

“When we export crude to Europe and import fuel, we export jobs and put pressure on our scarce foreign exchange.

“The refinery will save us from that and create thousands of direct and indirect jobs.

“Apart from these obvious benefits, the over $12 billion spent annually on importation of PMS and diesel alone would be saved and have a salutary effect on our exchange rate.

“Also, the refinery will make fuel available at affordable price and save us from long queues of fuel scarcity as the long wait normally required for imported fuel to arrive Nigeria will no longer be there”, Nwakwue said.

According to a development economist, Kelvin Emmanuel, there will be flexibility in Nigeria’s foreign exchange market once cargo lifting of refined products commences.

“Gas is also a low-hanging fruit for the new government if they can really pay closer attention to it”, Emmanuel noted.

Also commenting, a Senior Lecturer in the Economics Department of the Osun State University, Osogbo, Dr. Rasheed Oyaromade, said Dangote should be commended for daring to run where even angels dare to thread.

“There’s a lot riding on the refinery project. Of course, government officials and economic experts on their payroll say that every time, if for no other reason than to trumpet their own achievements and sustaining their retainership.

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“But this time around, even the most cynical among us see the importance of the coming on board of the project”, Oyaromade noted.

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