After years of delays and a week before resigning from office, Nigeria’s President Muhammadu Buhari on Monday finally put the finishing touches on what is advertised as Africa’s largest oil refinery.
Aliko Dangote, the richest man in Africa, built a refinery in the commercial capital of Lagos. The refinery is slated to start up in June, and the first goods are anticipated to hit the market in August, while some analysts predicted a later release date.
According to the corporation, it will be able to process 650,000 barrels per day once it is operating at full capacity.
The project, according to Buhari, who will leave office on May 29 after serving eight years in government, is “a notable milestone” and “a game changer for the downstream petroleum products market, not only in Nigeria but for the entire African continent.”
The commissioning was attended by the presidents of Ghana, Niger, Togo, Senegal, and a delegate of the Chadian leader.
According to Dangote, the refinery will supply both Nigeria’s home market and the rest of the world.
“Once our plant is fully commissioned… we expect that at least 40 percent of the capacity will be available for export, and this will result in significant foreign exchange entering the country,” said Dangote.
Due to underperforming state-run refineries, the most populous country in Africa and one of the biggest suppliers of oil has relied on imports of fuel for many years to satisfy domestic demand.
Nigeria trades for gasoline that it then subsidies for its domestic market in exchange for petroleum worth billions of dollars.
It has resulted in a significant drain on foreign exchange at a time when oil revenues are declining as a result of the coronavirus outbreak and the Russia-Ukraine conflict.
Costly subsidies
Although it was “important for Buhari to inaugurate (the plant) before leaving power,” analyst Tunde Leye of the Lagos-based SBM Intelligence consultancy doesn’t anticipate the refinery to be completely operating before the end of 2024.
The chairman of Eurasia Group’s Africa division, Amaka Anku, was more upbeat about the schedule.
“It typically takes six to nine months to get to full operations,” she told AFP, which would be “by the end of the year or next year.”
She added that a variety of sectors, including construction and the pharmaceutical industry, that depend on refined crude products will benefit from the “significant” project.
Both analysts pointed out that Dangote’s refinery won’t reduce the cost of petroleum goods, but it might provide the government a chance to cut out expensive subsidies and deal with revenue shortfalls.
“I think that this is a significant opportunity for the government to support its goal of removing subsidies,” said Anku, but “there’s a political decision to be made.”
President-elect Bola Tinubu has declared that he will end subsidies once in office; the opposition is contesting his victory from February. He wasn’t there when he was commision.
According to Anku, the refinery might also contribute to greater openness in the oil industry.
“Dangote is a publicly listed company so it will be publishing information about how much crude it is purchasing and petroleum it is selling,” she said, noting it as an improvement compared to the current situation where “we don’t have a lot of transparency.”
According to observers, the current opaque structure has encouraged corruption and restricted government investment in important sectors like healthcare and education.
The new plant, which is situated on 2,635 hectares (6,500 acres) of land in the Lekki Free Zone, was initially expected to cost $9 billion, but the corporation reports that $18.5 billion has been spent to finish it.
Subsea pipelines have been installed over 1,100 kilometers (about 680 miles) to connect the complex to the oil-rich Niger Delta.
The pipelines are also anticipated to provide a route for the removal of trapped gas from offshore installations and to enable the product’s commercialisation.
A $2 billion fertiliser factory with a three million tonne annual capacity is located on the enormous site as well.
According to the Lagos State government, the project is expected to generate more than 100,000 direct and indirect jobs.
