Dangote refinery: The metaphysical jinx of impossibility in Nigeria
Dangote refinery as a metaphor: Breaking the metaphysical jinx of impossibility in Nigeria
By: Comrade Gbenga Olowoyo
The euphoria that greeted the commissioning of Dangote refinery in Nigeria was unprecedented because the project itself is gigantic , marvelous and a monumental breakthrough to Nigeria economy.
In recent past, there were arguments and postulations on the way out of multifarious quagmire that were associated with our Refineries as well as Oil and Gas sector in Nigeria.
I have put up an opinion titled and published on 7th May, 2023 “Fuel Subsidy as an albatross to Nigeria economy and a death sentence against Nigerian masses”. which ex-rayed terrible economic side effects in the payment of trillions of Naira as Subsidy, to the economy of Nigeria and Nigerians as people
A twist has been added on May 22nd , 2023, with the intervention of almighty God, when Dangote refinery was inaugurated in Lagos with fanfare , words of assurances and encouragements that the Nigeria Oil and Gas sector business will change for better
The Dangote refinery will be producing Premium Motor Spirit (PMS), diesel (AGO), aviation jet fuel and Dual-Purpose Kerosene (DPK), among other refined products.
In the words of the CEO Dangote Petroleum Refinery and Petrochemicals, Sanjay Gupta, revealed that “everything in this plant by way of size is the first. It is the largest single-train refinery in the world.
“There is no single column which can process 650,000 barrels per day anywhere else,” he declared
The Dangote Refinery and Petrochemical complex in Lekki sits on land that is more than 3 times the size of Victoria Island.
The refinery will generates 570MW electricity; all to be consumed by the project
It was equally revealed that the Dangote refinery is the largest active single project ongoing in the world today and 2nd largest refinery in the world with 45 bridges constructed within the industrial complex as part of the road network while the industrial city has 123 road networks.
There are 125 control centers housing for various sub-units of the refinery & petrochemical complex while the industrial city has accommodation for 50,000 workers while there are 300,000 people working from around the world on the project.
The combined total storage capacity for the finished products is put at 4.2 billion litres.
The Dangote Group brought into Nigeria, a 5,000 tons capacity crane; which is one of the only two in the world specifically for the installation of the crude oil separating unit as well as two other units . The Dangote has the largest equipment fleet owned by a single company in Africa.
Over 250 million man-hours have been invested so far on the project while it was disclosed that Fertilizer exports have commenced with the first bulk of shipments to Brazil, US, etc, with the aforestated strong points, it can not be controverted and neither be doubted that Dangote refinery has come to stay to impact positively in the economy of Nigeria.
Experts believed that the Dangote Refinery could help achieve macroeconomic stability in Nigeria’s oil and gas sector as it commences operation by this year 2023 July ending.
The plant which is arguably Africa’s biggest oil refinery and the worlds biggest simple-train facility will no doubt create more employment opportunities for Nigeria’s teeming population.
The refinery is going to provide competitive template to the nation’s troubled oil sector because it will definitely increase human labour, and capital stock productivity.
It is revealing when Governor of the Central Bank of Nigeria, Godwin Emefiele disclosed that the Dangote Group has remitted 70 percent of the loans it obtained from the apex bank to build its oil refinery.
In his words at the commissioning of the refinery on Monday, the Governor of CBN Emefiele said the commercial loan component of the project was financed majorly by domestic banks while the rest was made available by foreign banks.
According to him, the CBN provided about N125 billion for domestic currency requirements while also ensuring the availability of foreign exchange (FX) to pay for imported equipment.
“According to Emefiele, “today, total loans outstanding have dropped from over $9 billion when this project started to N2.7 billion. This reflects the astute credit worthiness and commercial capability of the group and its chairman, Alhaji Dangote.
President Mohammodu Buhari of Nigeria equally declared at the commissioning of Dangote refinery,( the occasion attended by Heads of State from Ghana, Togo, Niger, Senegal and a representative of the President of Chad,) that the feat is a significant milestone for Nigeria’s economy and a game changer for the downstream petroleum products market in the entire African region.
‘‘This mega industry we are commissioning today is a clear example of what can be achieved when entrepreneurs are encouraged and supported and when an enabling environment is created for investments and for businesses to thrive” President Buhari submitted.
The President commended Alhaji Aliko Dangote’s leadership in executing the 650,000 barrels per day refinery and urged other entrepreneurs to emulate his example in driving economic growth and realizing Nigeria’s economic potential.
President Mohammodu Buhari urged and encouraged other great entrepreneurs to emulate this iconic Nigerian industrialist and join the Government in accelerating our growth in order to realize our country’s globally recognized economic potential.
‘‘ln his words, when I travel around Africa and meet and engage my brother Heads of State (and I am delighted some of their Excellences are here) I often sense a quiet expectation that our country is blessed with resources and human capacity to lead Africa’s rise to economic prosperity and the attainment of Agenda 2063 – ‘The Africa we all want.’
‘‘But to achieve the goals of Agenda 2063, Africa must come together – we must integrate our economies, eliminate barriers to trade and energize our youthful population to scale up our productive capacity.
‘‘We must create necessary conditions for our private sector to grow and partner with the public sector to accelerate economic growth across the continent.
Buhari acknowledged the visionary investments made by the Dangote Group, under the leadership of Dangote, in transforming Nigeria’s economy through its involvement in critical industries such as cement and fertilizer.
Different stakeholders in Oil and Gas sector have expressed their views and expectations on this project, the independent marketers association of Nigeria (IPMAN) disclosed that Dangote refinery will end fuel scarcity in Nigeria with its capacity to refine 650,000 barrels of crude oil per day.
Reacting to the start up of the plant, IPMAN said the operations of Dangote refinery will force the government to sell off the nation’s four refineries, as they (government) will not be able to compete with a private business like Dangote refinery.
Nigerans need to commend the President of Dangote Group Aliko Dangote who had assured that the newly commissioned Dangote Refinery will supply its first tranche of petroleum products to the market before the end of July and the refinery will create 9,500 direct jobs and 25,000 indirect jobs.
In the words of Aliko Dangote “It is our firm commitment that we will replicate in this sector what we have actually achieved in the cement and fertilizer markets while Nigeria transformed from being the largest importer of these crude products to a net exporter. Our first goal is to ramp up projections of various production to ensure that within this year, we are able to fully satisfy our nation’s demand for higher quality products to enable us to eliminate the tragedy of import dependency and stop, once and for all, the dumping in our market of toxic substandard petroleum products.
“Our first products will be in the market before the end of July, beginning of August this year.
“The company will ensure that its plants are run at the highest capacity utilisation and the highest efficiency to enable the refinery to export competitively to other markets.”
Dangote added that the operationalisation of the refinery is a clear opportunity for Nigeria given the African Union’s commitment to the creation of an African common market through the recently established African Continental Free Trade Area (AfCFTA).
IPMAN Chairman in Rivers State, Dr Joseph Obele, congratulated the Chief Executive officer of Dangote Group, Alhaji Aliko Dangote, saying that his refinery will lead to business boom and expansions in the country’s oil and gas sector.
Dangote refinery is a great news for Nigeria and Africa at large, but a bad news to long time subsidy cabal as their reign of importation and subsidy fraudulent payment will automatically come to an end.
It is expected that once the refinery commences operations, the pressure on Nigeria’s Naira will reduce and promote significant inflow of foreign currencies.
There will also be availablity of Jet Fuel, ATK, PMS, DPK and AGO in large quantity, but at a global competitive rate.
This Dangote refinery commissioning will lead to the sales of the nation’s owned refineries, on account that no government agency such as NNPC can stand competition with a private firm like Dangote that operates the competitive game theory as strategy.
IPMAN observed that Dangote refinery will mark the end of fuel scarcity in Nigeria but a beginning of a global competitive selling price,
For record purposes, the four non functional existing Federal Government refineries in Nigeria are as stated below:
Old Port Harcourt Refinery; capacity 60,000 bpsd commissioned in 1965.
Warri Refining and Petrochemical Company; capacity 125,000 bpsd commissioned in 1978.
Kaduna Refining and Petrochemical Company; capacity 110,000 bpsd commissioned in 1980.
New Port Harcourt Refinery; capacity 150,000 bpsd commissioned in 1989.
Thus, the total installed capacity is 445,000 bpsd. These plants in the last 15–20 years had a poor operating record with average capacity utilization hovering between 15 and 25% per annum. As a result, 70–80% of the national petroleum products demand is met through import.
This above scenario of moribund situation of Nigeria refineries must have informed the decision by the Dangote Group to invest in the construction of a 650,000 bpsd refinery which was commissioned on 22nd May , 2023
With the commissioning of Dangote refinery in Nigeria the incoming Government should beam its search light on the existing refineries and they should be rehabilitated and brought back into operation, to at least 80–90% capacity utilization.
This can be achieved either through a private sector led financing and rehabilitation initiative as is currently being pursued by NNPC, or through outright divestment of majority equity shareholding to the private sector from the current 100% ownership by Govt to stimulate seriousness in the management of Government refineries.
The Government refineries should be managed on a fully commercial governance structure in which decision making should rest with the Board of Governors of the Plants, with full control of their funds.
The refineries should market their products directly to off-takers, so as to recover maximum value.
Government should create an enabling environment with fiscal incentives to attract investments into refining in Nigeria and make this happen.
I want to state that there is need to use oil revenues wisely, to create a better future, especially as the world is moving toward renewable energy technologies.
Thank God , the impression created by the previous democratically elected Governments in Nigeria, since 1999, that the Federal Government of Nigeria can not make our refineries work or build new one hitherto, has been obliterated with the commissioning of Dangote refinery, Nigerians must rejoice, the jinx has been broken to pave way for new path to Nigeria economic prosperity.
Comrade Gbenga Olowoyo, fcia fipma JP, a Trade Unionist and industrial relations practitioner email@example.com 08033570338