Dangote’s $19B Refinery Kickstarts Production for the 6th Time

iexclusivenews – Dangote Refinery, owned by the Dangote Group conglomerate, is a massive oil refinery project that has been repeatedly postponed and faced various obstacles.

The refinery, which is located in the Lekki Free Zone near Lagos, Nigeria, is expected to be Africa’s biggest oil refinery and the world’s biggest single-train facility, with a capacity to process about 650,000 barrels of crude oil per day.

The project, which costs over 19 billion US dollars, was inaugurated on the 22nd of May, 2023, but has not yet started operations.

A Brief History of the Project

The Dangote Refinery project was first announced by Nigerian billionaire Aliko Dangote in September 2013, when he said he had secured about 3.3 billion US dollars in financing for the project.

He claimed that he had 3 billion US dollars of his own money to invest in the project, which was estimated to cost 9 billion US dollars at the time.

The remaining amount was supposed to be raised through commercial loans (Other Peoples Money).

The refinery was initially planned to be completed in 2016 and start production in 2017.

However, the project faced several delays and challenges, such as a change in location to Lekki, construction issues, technical difficulties, and supply problems.

The completion date was pushed back to late 2018, then to late 2019, then to early 2020, and then to late 2020.

According to Reuters, some sources familiar with the project said that the construction was likely to take at least twice as long as Dangote publicly stated, and that partial refining capability was not likely to be achieved until 2022.

In July 2017, major structural construction began, and Dangote also announced an associated project at the site of the refinery, a urea fertilizer factory, which was scheduled to begin operation in late 2018 and produce about three million tons of urea annually.

In 2018, the total cost of the project was estimated to be up to 15 billion US dollars, with 10 billion US dollars invested in the refinery, 2.5 billion US dollars in the fertilizer factory, and 2.5 billion US dollars in pipeline infrastructure.

In July 2022, Dangote had to borrow 187 billion naira (about 442 million US dollars) at 12.75% resp. 13.5% p.a. to complete the refinery, as the completion continued to drag.

Fitch Ratings noted that the refinery’s start date had been postponed three times in four years and feared diminished investor confidence if operations did not begin in 2023.

At the same time, all of the four refineries of the state-owned oil company NNPC (in Kaduna, Port Harcourt and Warri) were idle and expected to process crude oil again in 2023 after “revamping”.

In January 2023, the completion of the refinery’s power plant was announced.

The inauguration was expected to take place at the end of the first quarter of 2023.

In September 2023, the refinery announced that it would start producing Diesel and kerosene in October 2023 and gasoline one month later.

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Dangote Refinery Receives Its Maiden Crude Cargo

A Controversial and Uncertain Future

However, in September 2023, it became clear that the refinery would not yet be able to start operations because of the lack of crude oil supply.

This caused considerable public reaction and criticism.

On 25 November, the Financial Times gave a new date for the start of operations in December 2023, with the refinery expecting a delivery of 6 million barrels of crude oil in December, after which operations could begin.

But in the same week that the production of Diesel and aviation fuel A1 was expected to hit the market in the 2nd week of 2024, the refinery faced another setback.

The Economic and Financial Crimes Commission (EFCC), an anti-corruption agency, raided the HQ office of the Dangote Group in Victoria Island, Lagos, on allegations of acquiring forex allocations through the former apex bank governor, Mr. Godwin Emefiele, in 2014.

The EFCC requested that the conglomerate provide the details of foreign exchange allocated by the former CBN Governor, Mr. Godwin Emefiele, to the company from 2014 till date, in a letter sent to the company in the first week of December.

The Dangote Group denied any wrongdoing and released a press statement to reassure its investors and the public that the EFCC investigation was not related to any fraud or corruption.

Meanwhile, with the gas flare burning sighted on site, many people have mistaken it for actual refining of crude oil, which is still uncertain at the moment.

The Dangote Refinery project has been a long-awaited and ambitious venture that has faced multiple delays and challenges.

It remains to be seen whether it will finally start operations and fulfill its promise of being Africa’s biggest oil refinery and the world’s biggest single-train facility.

(WestAfricaWeekly.com)