The Dangote Group has enlarged the capacity of its refinery which is under construction from 450,000 barrels per day to 650,000, making it one of the largest refineries in the world when it is completed
| By Anayo Ezugwu | Apr. 6, 2015 @ 01:00 GMT |
THE Dangote refinery, which is under construction, will make Nigeria one of the largest petroleum refiners in the world when it is completed. The refinery will process 650,000 barrels of crude oil per day. Aliko Dangote, president, Dangote Group, in a statement on Sunday, March 22, said though the initial plan was to have 450,000 barrels per day, bpd, refining capacity, he had since gone back to the drawing board to enlarge the plant.
He said Nigeria as a leading producer of crude oil should also be credited with similar local refining capacity. According to him, the present situation where the country produces crude oil but goes abroad to buy refined products is unacceptable. Dangote, who spoke through Devakumar Edwin, group executive director, Dangote Group, said the conglomerate was ready to reverse the trend just as it had successfully done in other sectors, including sugar and cement.
Edwin, while receiving on behalf of Dangote a group of oil and gas stakeholders in Lagos, said the capacity of the petrochemical plant, being developed alongside the refinery, had been increased from 750,000 to 3.6 million tonnes. “The entire petrochemical industry is history. Nobody has started with a 3.6-million-tonne capacity anywhere in the world. We are doing two million tonnes of polypropylene and 1.6 tonnes of polythene, which is approximately 3.6 million tonnes and is a huge petrochemical complex.”
Edwin said the consumption of petrochemical products in Nigeria and the sub-Saharan Africa was quite limited but noted that there would be growth in the future. “If the cement industry had not developed like this today; if we were still living with a 3.4-million-tonne per annum capacity; today, we would have imported about 16 million tonnes of cement and you can imagine if we had imported this, it would have cost the country $2billion of foreign exchange,” he explained.
While dismissing fears that any change in government policy could affect the business, Edwin said, “We have witnessed so many political upheavals but never had any negative impact on our business as such because our business is not dependent on any government contracts or any linkage to the government. Fortunately, for the business we are in and the way we carry out risk analysis, we go through a rigorous analysis. One of the reasons why we carry out this rigorous risk analysis is because most of the investments come from the president’s pocket and he makes massive investment. Obviously, he will not want his investments to be wiped out because of one mistake.”
Meanwhile, Mansur Ahmed, executive director, stakeholders’ management and corporate communications, Dangote Group, who stood in for Dangote at the second African Refiners’ Association Conference in South Africa, said the refinery would come on-stream in the third quarter of 2017. According to Reuters, the refinery will cut reliance on international markets for Nigeria, adding, by the third quarter of 2017, the company will be looking at commissioning the refinery. The refinery is being designed to process Nigerian crude mix and produce products conforming to Euro V fuel specifications, as fuel demands across the continent are forecast to rise rapidly with many countries enjoying strong economic growth.
Ahmed said the refinery, which is being funded by debt and equity, including a $3 billion commitment from Dangote himself, could approach the capital market in future should additional capital be needed. “In the past when we have reached a point where we feel we need to increase capital we have listed. We have listed our cement business, we have listed our sugar business and our salt business and, if you like, history is the best teacher.”
He lamented the continent’s dependence on imported refined petroleum products to support the robust economic growth of the past decade. He said as the continent continued to enjoy rapid growth, the demand for petroleum products would increase. “The OPEC estimates that demand in Africa is expected to grow annually at around 1.7 percent over the next 25 years. With the current state of our refineries, all of this additional demand may have to be imported from outside the continent if urgent steps are not taken to boost African supply,” Ahmed said.
The Dangote Group has interests ranging from cement to basic food processing to oil and gas. In February, construction work began on the refinery, which the group says will be the single largest in the world.