Explainer: What 200m-litre Bestaf Lubricant plant means for Nigeria’s economy

President Muhammadu Buhari commissioned a 200-million-litre lubricant plant on Monday in Lagos, a project described as the first of its kind in the West African market.

The Bestaf lubricant plant is owned by Sayyu Dantata, the founder and chief executive officer of MRS Holdings Limited.

What is a lubricant plant

According to Energy Insights by Mckinsey & Company, a lubricant plant, also known as a base oil plant, extracts high-viscosity heavy material from vacuum gas oil and vacuum resid to produce base oils.

It said base oils are the blend stocks for producing finished lubricating oils such as motor oil, adding: “Base oils are a speciality product of very high value.”

“So even though the volumes of base oil produced in a plant may be very small, it can contribute significantly to overall refinery profitability. However, the capital cost per barrel of lubes plants is relatively high; so only a subset of refineries have installed them,” said McKinsey & Company.

According to the consulting firm, lubes or base oil plant typically consists of several different steps of processing, though not all plants will have all of the steps. These include: propane deasphalting, lubes aromatics extraction, dewaxing, lubes hydrocracking, and lubes hydrotreating.

Implication for Nigeria’s economy

Dantata said the plant, which has the capacity of producing 1,700 different products, will contribute to foreign exchange generation for the country, through products export, as well as meet the needs of other neighbouring countries.

The capacity in the lubricants market in Nigeria stood at 503.50 million litres in 2021 and is projected to register a compound annual growth rate of 3.48 percent to reach 597.33 million litres in 2026, according to the latest market report by Mordor Intelligence, an Indian-based consultancy firm.

“With this facility, we already produce 50 percent of the consumption on the Nigerian market,” said Andreas Wielsch, managing director of Bestaf Trading Company FZE.

He said the company is looking to serve the Nigerian and West African markets.

On importation, Nigeria spent N33.9 billion bringing in other lubricating oils meant to be mixed further in the third quarter of last year, the latest data from the National Bureau of Statistics showed.

“Bestaf is working on growing the Nigerian market and also reducing the country’s importation of the product,” Wielsch said.

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According to the company, it can also manufacture and fill 110 million cans per year of various aerosol products like insect repellants, cosmetic aerosols, air fresheners, and pharmaceutical aerosols.

Babajide Sanwo-Olu, Lagos state governor, said the facility, which is an integrated, first-in-class lubricant factory, is going to increase the number of youth employment, generate revenue, and reduce the country’s import dependency.

“Generally, this facility will blossom our economy,” the governor said during the inauguration of the project.