Aliko Dangote plans to spend $15 billion on a task that, if successful, can revolutionize Nigeria’s economy.
Aliko Dangote plans to spend $15 billion on a task that, if successful, can revolutionize Nigeria’s economy.
On March 6, Dangote Industries’ oil refinery and fertilizer plant are under structure in the Ibeju Lekki district on the outskirts of Lagos, Nigeria, on March 6.
On March 6, Dangote Industries’ oil refinery and fertilizer plant are under structure in the Ibeju Lekki district on the outskirts of Lagos, Nigeria, on March 6.
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On a peninsula east of Lagos, 30,000 people are hired on an assignment that promises Nigeria’s economic fortune.
This is where Aliko Dangote, Africa’s richest man, plans to spend more than his net worth of $13. 5 billion to build one of the world’s largest oil refineries. billions a year in fuel, and see how it fulfills its own desires and supplies neighboring countries.
The collapse of oil costs and Nigeria’s lousy track record in trade allocations are threat factors, but Dangote’s bet has the ability to revolutionize Nigeria’s economy, with its operations adding $13 billion, or 2. 3% of gross domestic product, according to a 2018 estimate through Renaissance. Capital. Central Bank Governor Godwin Emefiele said the allocation could employ more than 70,000 people when it is operational.
“Yes, the dangers are high, the demanding situations are high,” said Devakumar Edwin, general manager of the refinery complex, who has worked with the billionaire for about 3 decades. “But the rewards are high. “
The place is full of superlatives. The largest trade allocation ever made in Nigeria has a distillation column to separate crude oil into fuels at other temperatures, the largest of its kind in the world. The 650,000-barrel-per-day refinery is just a $15 billion petrochemical complex component that will also house a fuel processor and the world’s largest ammonia and urea plant, which is used in the manufacture of plastics and fertilizers.
However, Nigeria’s previous attempts at fuel self-sufficiency have not been successful. Its 4 state-owned refineries, opened in the 1970s, were operating at a fraction of its own before closing in January for renovation.
A first attempt through Dangote to enter the refining company failed. In 2007, it bought one of the state-operated factories only to locate temporarily cancelled privatization through a new government.
Previous efforts to use trade progression as a means to reduce the country’s dependence on oil have more often failed. Nigeria has invested at least $ 5 billion in the Ajaokuta metal allocation on the banks of the Niger River since 1979, and it is not in production yet.
“As a symbol of Nigerian progress, it’s important,” said Charles Robertson, Renaissance’s leading economist in London, about the Dangote refinery.
Nigeria wants all the help it can get. The country is recovering from the effects of the Covid-19 pandemic and the record oil drop, which accounts for more than 90% of its foreign exchange revenues. devalue its currency, the naira, twice since March, and take out its first loan from the International Monetary Fund, which foresees an economic downturn of 5. 4% this year.
Even for Dangote, which has built an empire with cement factories in Africa and has assets ranging from sugar generators to salt refining facilities, the petrochemical complex is ambitious.
“Nigeria will soon be the first and only urea exporter in sub-Saharan Africa for the first time,” Dangote said in March. “And we not only export, we export a lot. ” Fertilizer exports alone will generate about $ 2. 5 billion in profit consistent with the year, he said.
Roads and docks had to be built to carry heavy cargo, while a quarry with a garage capacity of 10 million tons of granite exceeded only for the project.
The company has started talks with oil manufacturers for the crude oil source to the refinery, expecting that within two years of the onset of inconsistencies, up to 100,000 barrels consistent with the day will come from two oil fields purchased from Royal Dutch Shell. Plc, Edwin said.
It’s “a revolutionary for regional sourcing,” said Jeremy Parker, analyst at Citac, a London-based African oil refining and distribution consultancy.
It also has the government’s. ” We inspired all players to identify refineries in this country,” mele Kyari, managing director of the Nigeria National Petroleum Corps national group, said Tuesday. The purpose is that in two or three years. “you will see a country that will become a pole of oil derivatives production,” he said.
However, the allocation has been hit by delays, with the initial opening date scheduled for 2016 and then 2019. Edwin said in a webinar Thursday that the start-up of operations would now be postponed until the end of 2021 due to the coronavirus. The installation is expected to start until 2023.
It is also a highly competitive market at a time when refining margins are shrinking due to falling oil prices. In July, refinery profit margins were at their lowest point since 2010 and Patrick Pouyanne, president of Total SA, described them as “absolutely catastrophic. “
Read more: The $2 trillion-a-year refining crisis lost in oil uptick
To be successful, the refinery will also have to update the cartels that have ruled Nigeria’s fuel import activities for more than two decades, a source of wealth for the politically linked and a motivation for the continued disorder of domestic refineries.
However, once it is in operation, it can be a strong symbol of trade progress in a country that has experienced many fake leaves in its quest for its dependence on crude oil.
“This tipped the scales in a country that is very entrepreneurial,” said Antony Goldman, founder and CEO of Promedia Consulting, a political consultancy. He tells Nigerians that “we can make money by making things work. “