Africa’s wealthiest man, Aliko Dangote, has built a colossal oil refinery in the Ibeju Lekki district, on the outskirts of Lagos, Nigeria.
The Dangote Oil Refinery, with a capacity to process 650,000 barrels of crude oil daily, is set to be one of the largest oil refineries globally when it fully commences operations. The full project is estimated to cost £15 billion.
The refinery is projected to create 9,500 direct and 25,000 indirect jobs and will produce Euro-V quality petrol and diesel, as well as jet fuel and polypropylene.
Dangote secured a £2.6 billion syndicated loan arranged by Standard Chartered Plc, but about 60 percent of the Dangote Oil Refinery will be self-funded.
Initially, the refinery was estimated to cost around £8 billion, with £2.3 billion invested by the Dangote Group and the remainder through commercial loans, with production starting in 2016.
However, due to a change in location to Lekki, construction didn’t begin until 2016, pushing the planned completion date back to late 2018.
By July 2022, Dangote had to secure a loan of 187 billion naira (approximately £349 million) at interest rates of 12.75 percent and 13.5 percent per annum to complete the refinery.
At the same time, all four refineries owned by the state-run oil company NNPC, located in Kaduna, Port Harcourt, and Warri, remained closed, with plans to resume crude oil processing in 2023 following a “revamping” process.
After launching in May 2023, in September that year, the refinery announced its intention to commence production of diesel and kerosene the following month, followed by gasoline in November.
However, it soon became apparent that the refinery’s operational start would be delayed due to issues with crude oil supply.
By January 2024, the refinery had begun producing diesel fuel and aviation fuel A1, the most common jet fuel outside the US. The Dangote Refinery has the capacity to meet all of Nigeria’s oil needs, with a surplus for export.
However, on 26 June 2024, a minor fire broke out at the refinery. Footage from the scene showed smoke and flames emanating from one corner of the plant. Despite this, the operator assured in a statement that the incident had no impact.
The sale of petrol commenced in mid-September.
Fast forward to November 2024, reports emerged that Dangote was negotiating with commercial lenders, development banks, oil traders, and other industry stakeholders to secure funds for crude supplies.
However, investors have voiced concerns over Dangote’s ability to ensure a consistent crude supply and the refinery’s profitability due to the devaluation of Nigeria’s currency.
