Dangote Refinery To Generate $21bn, Ease Nigeria’s FX Hiccups, Employ 100,000 Youths
Caption: Aliko Dangote, President/Chief Executive, Dangote Industries Limited (third left); assisting Nigerian President, Muhammadu Buhari (fourth left), to cut the tape at the commissioning of Dangote Petroleum Refinery and Petrochemicals FZE, (650,000 barrels per day Petroleum Refining and 900,000 tonnes per annum Polypropylene Production) in Lagos on Monday, May 22, 2023. They are flanked by the Lagos State Governor, Babajide Sanwo-Olu (left; Senate President, Sen. Ahmad Ibrahim Lawan (second left); President of Togo, Faure Gnassingbe (fourth right); Senator Abdullahi Adamu, All Progressives Congress (APC) National Chairman (third right), Ogun State Governor, Dapo Abiodun (second right); and Group Executive Director, Strategy, Capital Projects & Portfolio Development, Dangote Industries Limited, Devakumar Edwin (right).
President of the pan-African conglomerate, Dangote Industries Limited (DIL), Aliko Dangote, on Monday said the newly commissioned 650,000 barrel per day Dangote Refinery & Petrochemicals project could generate over $21bn when fully operational.
The commissioning which marked the beginning of the new journey of Nigeria’s self-sufficiency in and export of refined petroleum products just as been achieved in cement and lately fertilizer, he explained, would help the nation conserve the huge foreign exchange spent on fuel importation annually, while providing jobs for over 100,000 Nigerians youths, up from the over 33,000 employees at the moment.
Dangote lamented that the current fuel crisis has had negative impact on the nation’s economy, a situation that informed his decision to build a world class refinery capable of reversing the trend not minding the challenges.
He highlighted events leading to his firm deciding to build its own refinery after his attempt to acquire one of the existing moribund did not materialize noting that he decided to change marketing strategy and settle for the gigantic project ever undertaken by an individual world over.
According to him, the refinery plant would be run at the highest effective and efficient level for maximum benefits to all Nigerians noting “we will replicate what we achieved in cement and fertilizer by attaining self-sufficiency and becoming net exporter.
Dangote assured Nigerians that 40% of the production capacity will be available for export with the coming on stream of the plant guaranteeing raw materials for plastic, and pharmaceutical industries.
Commissioning the project, President Buhari congratulated Dangote Group, saying “the 650,000 barrels a day of crude which will enable our country to achieve self-sufficiency in refined products and even have some supplies for export saying the government and people of Nigeria are proud of the doggedness and tenacity of Dangote as entrepreneur.
“This feat at this time of the nation’s economic development clearly made this event a notable milestone for our economy and the game changer for the downstream petroleum products not only for Nigeria but the entire African continent. Dangote Group has helped transform our economy from heavy import dependence to a net exporter in some critical industries, including cement and Fertiliser,” he stressed.
The President noted that the economy which has been troubled for many decades by huge deficits in infrastructure and over a decade of insurgency has also been severely impacted by several external crises, including the global financial crisis, the collapse of world crisis the Coronavirus pandemic and the Russia Ukraine war.
“The consequences of these challenges constitute a severe strain on our economy and limiting government’s ability to provide basic infrastructure without resorting to borrowing. Government therefore decide to focus attention on creating an enabling environment for the private sector to thrive and fill the enormous gap in investments not only in infrastructure, but also in all critical sectors.
“We recognize that without active participation of the private sector and a strong commitment to public-private partnership, the economy will not be able to continue to meet the challenge and economic growth”, while expressing the hope that the coming administration will continue to apply such innovative schemes to accelerate the fruition of critical infrastructure, in particular roads and gas pipelines.
In his remark, Godwin Emefiele, Governor of Central Bank of Nigeria (CBN), commended Dangote for the successful completion of the refinery project which would aid national domestic petrol needs, and also generating export revenues for the country.
He recalled how “in September 2013, when Alhaji Aliko Dangote announced his plans for the refinery, it was estimated to cost about US$9bn, of which US$3bn was projected as equity investment by the Dangote Group and the balance financed through commercial loans.”
However, he said, “due to an array of factors, the project was eventually completed with a total of US$18.5 billion with funding distributed into 50 percent equity investment and 50 percent debt finance. I am proud to state that the commercial loan component of the project was financed majorly by our domestic banks with the balance sourced from foreign banks.”
The CBN, he continued, “also partnered, as always, with the Dangote Group in ensuring the successful completion of the project by providing about N125 billion, to cover domestic currency requirements for the venture.
It is gratifying, he stressed, “that the Dangote Group has started repaying some of the commercial loans even before the commissioning of this facility. This reflects the commercial capability of the Group and its Chairman. I am pleased to inform everyone today that, following extensive repayments, outstanding debt has dropped appreciably from over US$9bn to US$3bn.”
The CBN Governor commended Nigerian banks saying they not only partnered in the project through effective financing, but were keenly aware of its national importance, as seen in the immense support they provided and exceptional understanding, “even when interest payments and principal repayment had fallen due.”
The refinery and petrochemical project, he noted “shows that, regardless of what the world thinks, Nigeria can be self-sufficient in all products that we consume and at the same time export our excess output to the rest of the world.”
“Aside enumerating our strategic efforts in the agriculture and other critical sectors, a sterling projects that we highlighted was the gigantic Dangote Refinery and Petrochemical project. The world doubted our willpower to succeed with this project. In hindsight, I could appreciate their skepticism because they do not understand how a single individual could build a refinery capable of serving an entire nation. To them, projects of this magnitude are usually only undertaken by sovereigns not individuals.”
On his part, Mele Kolo Kyari, Group Managing Director of the Nigerian National Petroleum Company Limited (NNPC), said the NNPC was happy to partner Dangote Refinery because the project has potentials for smooth supply of petroleum and it would guarantee healthy competition for the benefits of the nation’s economy.
The NNPC, he assured, is committed to value adding potentials of the project, noting that the new Petroleum Industry Act will provide security of supply of refined products and protect the plant. The NNPC boss added that his was happy the refinery is coming on board at a time the subsidy on imported products has become unbearable for government.
In their respective goodwill messages, Presidents of Ghana, Senegal, Niger, Benin Republic and Chad expressed satisfaction that the Dangote Refinery will serve the West African region and that their countries would be beneficiaries saying the Dangote Refiner is an African company for Africa by an African entrepreneur.