By Brian Okoth
Africa’s richest man Aliko Dangote on Monday launched an oil refinery plant in Lekki, south-east of Lagos City, Nigeria.
The commissioning was presided over by President Muhammadu Buhari.
The new investment by Dangote becomes Africa’s biggest oil refinery and the world’s biggest single-train facility.
“I want to also share my gratitude to the president-elect [Bola Tinubu], who also set the pace by creating the Lekki Free Trade Zone [during his tenure as Governor of Lagos between 1999 and 2007],” said Dangote in a statement.
The tycoon said he was grateful to President Buhari for “all the assistance we got” during construction of the plant.
The businessman said Nigerians’ support towards helping him realise his dream was “too numerous to mention”.
Dangote Oil Refinery targets to produce 650,000 barrels daily, and has been designed to process crude oil from Africa, the Middle East and America. The fuel that the facility will process are petrol, diesel, jet fuel and polypropylene.
The refinery could lead to the creation of up to 100,000 direct and indirect jobs, and provide a $21 billion market for Nigerian crude oil each year.
At the same time, it can support the establishment of some 26,700 filling stations, government estimates show. The Dangote oil plant sits on 2,635 hectares of land.
Estimates by NS Energy show that the businessman, who owns multinational firm Dangote Group, spent $19 billion on his latest investment.
Kevin Emmanuel, a Nigerian economist and CEO of Dairy Hills, says the new refinery will have a “major impact in Nigeria”.
“I expect that the refinery will roll out its operations gradually. Over time, it should be able to produce more than 30 million litres of petrol, diesel, kerosene and jet fuel daily. That is enough capacity for the entire Nigeria,” said Emmanuel.
The economist said the plant’s impact will transcend boundaries and benefit more countries, especially those in the West African bloc.
“Ghana is among the countries that will benefit from the project. Currently, Ghana produces about 170,000 barrels of crude oil, and imports all of its petroleum products. Benin, Gambia and Senegal are the other nations that are likely to benefit from the refinery,” said Emmanuel.
“It would also make goods manufactured from petroleum more affordable in the local market, as buyers won’t have to import these goods from Europe and other markets.”
“Dangote, unlike the oil marketing companies, won’t be subjected to the 27 per cent landed fuel levies. At the same time, he won’t pay the carriage insurance duties and custom levies at the port. Dealers importing the products from Europe and Asia will have to incur the extra charges,” said Emmanuel.
Reduced coal production in Nigeria is what could pose a challenge to Dangote in his quest for optimal operations, according to Emmanuel. Coal is primarily used as fuel to generate electric power.
“Coal output in the country has reduced significantly. Sabotage and vandalism will be other challenges he’ll have to deal with. Dangote also has to ensure that at all times, the plant is located at least 45 kilometres away from residential estates,” said Emmanuel.
For a start, the economist says the Dangote refinery would inject between $11 billion and $13 billion to the Nigerian economy annually, a figure that could rise to between $18 billion and $20 billion if the firm operates optimally.
The refinery will guarantee an uninterrupted supply of fuel to the Nigerian market, even in situations where the foreign market gets disrupted by unforeseen or unavoidable factors, said Emmanuel.
Dangote, according to Forbes, had a net worth of $1.35 billion as of February 2023.
