Benefits Of Dangote’s $12bn Refinery

…Work accelerates to meet completion target
…Power Generation: 12,000MW
…Direct/Indirect Employment: 149,000
…Savings for Nigeria: $7.5billion
…To Generate Additional $5.5b

12,000MW of power generation can be added to the grid with the additional gas from our system…. We will be creating about 4,000 direct and 145,000 indirect jobs…save over $7.5billion for Nigeria annually…and generate an additional $5.5billion – Aliko Dangote

WHEN the bell that ushered the Minister of State for Petroleum Resources, Dr. Ibe Emmanuel Kachikwu, into his present office started to toll, the heart of many Nigerians leapt for joy that the nation’s four refineries would be fixed to refine commercial crude oil for domestic consumption. Kachikwu, who was also the Group Managing Director of the Nigerian National Petroleum Corporation, NNPC, promised to carry out maintenance of the country’s refineries within a few months.

Despite efforts, the capacity of the refineries has not been increased to meet local demand. Consequently, Nigeria continues to import a bulk of its petroleum products from the global market at the expense of its scarce foreign exchange.

But hope is not lost as the Dangote Group is set to complete its $12 billion refinery in 2019. The Dangote 650,000 barrels per day plant is perceived as a timely intervention to tackle the nation’s numerous challenges in the midstream sector of the industry.

Expectedly, the government has adopted the refinery as a strategy project aimed at enabling it to end its many years of massive importation. The reason is not far-fetched. The Federal Government has indicated that it relies heavily on the Dangote refinery to fulfil its promise to Nigerians. To this end, Kachikwu, who visited the Dangote Oil Refinery site at Lekki Free Trade Zone, in Lagos, said the government is ready to play its part as a responsible stakeholder to assist in making sure the project is completed before the scheduled date.

The minister, who said he was overwhelmed by the dimension of the project, explained that the present government had always believed that the private sector holds the ace in industrialisation efforts of the government, noted that, that belief has been reinforced by the Dangote refinery.

According to the nation’s new petroleum policy, Nigeria would move from oil as a source of income to fuel for economic growth. It stated that the petroleum policy intends to move the Nigerian economy away from exporting crude oil to IOCs for immediate cash benefits.

“Crude oil will not be exported, but a significant and growing proportion of government equity crude oil will be sent to local refineries (whether private or public).

“Under the implementation of the petroleum Policy, oil will be refined within Nigeria and further used to create value for the nation.

“The intention is to achieve a competitive supply of petroleum products; make Nigeria a refining hub; introduce petro-chemical industries to realise the full value from oil refining.”

However, the postulations of many observers are: will the Dangote plant be completed in record time? What support has been given by the government; And, what impact will it make on the nation’s economy?

Extent of work

A recent visit to the site of the plant in Lagos showed that progress has been made in many areas. For instance, the sand filling of the site has been completed. Work was ongoing in piling, targeted at preparing the ground for foundation laying. The construction of habour that would enhance import and export of various items was ongoing. Officials who expressed the management commitment to the project confirmed that efforts have been put in place to execute other segments of the refinery.

FG support

The government has indicated interest to support the completion of the project in record time because of its importance. Kachikwu who made the commitment, said, “the private investors have capacity to invest in different sectors of the nation’s economy.

“It is good to say that private sector is the answer to Nigerian’s problems with a project as big as this. The challenge I will give you today is that of time, I see your time for completion is 2019 December; but I am sure you will understand my desire if I tell you that the refinery component of this project should come earlier than the set date.

“I have made very firm commitment to Nigerians that I must stop importation of petroleum products by 2019 and I am going to keep to it. It is absolutely important that we do this early and given the feat that we have achieved in terms of speed of construction and I urge you to do all within you to achieve its completion before the due date.

“I am sure His Excellency President Muhammadu Buhari will be absolutely excited if he were to find himself, not only crystallizing the policy position we have taken so far, but also coming here himself to commission a facility, as big as this before the end of his first term. Whatever configurations your engineers have come up with, I urge that they go back to the drawing board and get me my refined products before your said date.”

Expected impact

The plant would likely make a lot of positive impact, especially because of its size. According to the President of Dangote Group, Dr. Aliko Dangote, the refinery will have the capacity to flood the domestic and international market with refined products. Also, the Petro-chemical Plant will produce 780 KTPA Polypropylene, 500 KTPA of Polyethylene while the Fertiliser project will produce 3.0 million metric tonnes per annum (mmtpa) of Urea.

“In addition, we are also building the largest sub-sea pipeline infrastructure in any country in the world, with a length of 1,100km, to handle 3 billion SCF of gas per day. We also plan to construct a 570 MW power plant in this complex. As a matter of fact, gas from our gas pipeline will augment the natural domestic gas supply and we estimate that an additional 12,000MW of power generation can be added to the grid with the additional gas from our system.

“We will be adding value to our economy as all these projects will be creating about 4,000 direct and 145,000 indirect jobs. We will also save over $7.5billion for Nigeria annually, through import substitution and generate an additional $5.5billion per annum through exports of the refined petroleum products, fertilizer and petro-chemicals. We envisage that these projects, which would cost over $18 billion, would be completed in 2019.

Local content

The refinery would also enhance local content development in Nigeria. Already, the management of the refinery has agreed to select competent Nigerian vendors that will participate in the construction of the plant from the Nigerian Oil and Gas Industry Joint Qualification System (NOGICJQS), the database of available capacities in the oil and gas industry managed by the Nigerian Content Development and Monitoring Board (NCDMB).

The Chief Operating Officer, Dangote Refinery Project, Mr. Giuseppe Surace, committed to this at the technical meeting held between top officials of the company and NCDMB at the refinery project site recently. He affirmed that there were many advantages in patronizing the local market, adding, “Nigerian companies will get the first right of refusal. We will procure anything that is available in Nigeria.”

The COO confirmed there were several Nigerian content opportunities in the company’s refinery and gas gathering projects but interested companies must submit competitive bids and have technical capabilities. He explained that the project is a private investment, hence the strategy is to get the best quality anywhere in the world at the most competitive price.

He advised local vendors to quote reasonable prices when bidding for industry projects, rather than believe that they would win jobs because of the Nigerian Content Act, irrespective of expensive quotations they submit. He noted that Dangote Group engaged the services of some Nigerian companies on its fertilizer project which had reached an advanced stage of development and was committed to do the same on the 650,000 barrels per day refinery project, which will be completed in October 2019.

The Executive Secretary NCDMB, Engr. Simbi Wabote, promised that the board will assist the company in the utilization of the NOGICJQS database, to ensure that it maximizes the utilization of local personnel, goods and services in the construction and operations phase of the project.

Beyond the DANGOTE Refinery, observers believe that the nation needs many modern refineries in order to meet domestic demand and turn the Gulf of Guinea (West Africa) into a major refining hub in the world. But with the efforts of Africa’s richest man, hope rises.


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