The Dangote refinery project is one of the major legacies of Aliko Dangote, which is being finished seven years later than planned, costing more than double of its original $9 billion budget.
The Nigerian National Petroleum Company Limited (NNPCL), owns a 20 per cent stake in the plant.
Nigeria is largely incapable of refining crude as its three state-owned refineries are in disrepair and operate at only about 30 per cent of capacity, despite the government spending $25 billion to revamp them.
Thus, Nigeria spends $23 billion annually on importing petroleum, which is then subsidised to the tune of about $10 billion a year at least until President Bola Tinubu, removed subsidies on his first day in office, last month. Pipelines: securing crude supplies will be crucial to plant’s success.
At full production, Dangote’s refinery could process as much as 650,000 barrels per day.
Although Nigeria’s OPEC production quota is 1.8 million the country now routinely produces just under 1 million barrels daily due to theft, vandalism and infrastructure problems.
The IMF said in a recent report that it does not expect the refinery to reach more than a third of its production capacity by 2025.
Securing crude supplies will be crucial to the plant’s success.
But the rampant violation of pipelines in the Niger Delta could make achieving that a big challenge. As such, no magical solution to Nigeria’s oil woes appears likely.
Analysts say that while Dangote’s refinery which at full stretch could produce 53million litres of petrol daily may “largely provide” the capacity for Nigeria “finally” to solve the supply problems that lead to periodic scarcities, it will have “little impact on the price of the products.” These will continue to be determined by global oil prices.
However, the refinery could be a boon for neighbouring countries, which often have to import petroleum products from further afield.