Africa’s richest entrepreneur, Aliko Dangote, plans to launch Nigeria’s first private crude oil refinery worth $12 billion by 2019.
According to Dangote, the refinery would have a capacity of 650,000 barrels a day, cornering the market in Africa’s most populous country, where fuel shortages are a perennial problem.
Until recently, Nigeria was Africa’s biggest crude oil producer but it imports 80% of its fuel because poor maintenance means its four refineries never reach full output. According to the International Energy Agency, its current daily consumption is 260,000 barrels.
Hence, a slump in commodity prices has severely impacted on Nigeria’s economy – along with many others on the continent – and raised the cost of borrowing, but Dangote is not deterred by these factors:
“It will be ready in the first quarter of 2019; Mechanical completion will be end of 2018 but we will start producing in 2019.”
Dangote said the plant, which will include a $2 billion fertilizer unit, was being funded through “loans, export credit agencies and our own equity”.
Some $3.25 billion had come from local and foreign banks, while the central bank had also chipped in. The IFC, the private sector arm of the World Bank, has lent $150 million.
In extension, Dangote also has plans for a gas pipeline through West Africa. Nigeria has the world’s ninth largest proven gas reserves, at 187 trillion cubic feet (tcf), but loses half of it to flaring and re-injection.
Nigeria is one of the major oil producing countries in the world today. While this has earned points for the country and contributed largely to its economic growth and development, it has also impacted negatively on the nation. Why? Nigeria is still heavily dependent on the revenue it generates from oil, hence has slacked in diversifying its economy.
Nigeria’s oil production has been affected greatly of recent by disruptions in the Niger Delta region which has also affected its economic output; the country has also lost its top spot as number one oil producing country to Angola.
It’s astonishing that as the giant of Africa with a large population, Nigeria does not have a refinery or one in proper order. Why, even Kenya who is not an oil producing state has a refinery! But the tide is about to change.
Having its oil produced and refined, here, in Nigeria instead of being exported, will be of a great advantage to the nation. Firstly, it will lead to the growth of other industries which will ultimately open new opportunities for investment and jobs. Secondly, oil will be cheaper! Lastly, this would help in rebuilding our poor infrastructure.
With fingers crossed, we await 2019…