• Sunday, February 25, 2024
businessday logo


Dangote places order for refinery equipment as FG grants licence

The quest by Africa’s richest man , Aliko Dangote to make an intervention in Nigeria’s long standing fuel supply hiccups is being pursued vigorously with advance orders believed to have been made for equipment  that will be used to build his proposed $8 billion refinery and petrochemical plant in Lekki, Lagos.

BusinessDay learnt yesterday that the orders for these equipment were made ahead of government granting a Licence-To-Establish (LTE) a refinery which Dangote received only a few days ago.

The equipment ordered include ‘Long Lead Items’ and a power plant, which ordinarily would take  between 18 and 21 months from time of order to time of delivery.

It is anticipated that these advance orders may cut short the take-off time of the project.

The Dangote Refinery and Petrochemical Plant is scheduled to become operational in the third quarter of 2017 and would have the capacity to process 400,000 barrels of petroleum per day.

Industry watchers say the establishment of the refinery would bring significant relief to the fuel supply situation in the country, save scarce foreign exchange, create jobs and serve as a platform for skills acquisition for the local workforce. It should also add to the purse of Aliko Dangote who is already Africa’s richest man.

Nigeria currently consumes  40million litres per day of premium Motor Spirit (PMS) otherwise known as petrol, the bulk of which is imported from Europe because the country’s four refineries are hardly functional much of the time.

The company is said to have before now concluded the re-settlement of communities, land clearing and site surveys  for the project. Real construction work is expected to now start in earnest.

The licence was issued to the  company by the  Department of  Petroleum  Resources  (DPR ) and basic engineering work is expected to be completed in January next year.

The next step would be detailed engineering   work, which would involve structural, mechanical, civil and electrical aspects and procurement.

Commenting on the development,  a stakeholder  in the downstream sector of the  oil and gas  industry  who  does  not  want his name mentioned, said it portends well.

‘’ It is a good development because I have always said that the private sector must be allowed to do the business of petroleum refining. However, some questions must be asked.What price is the company  going to sell the products at? What price is the company going to buy the crude oil from government at?”

He added that if  the company is going operate at the Export Processing  Zone (EPZ) ,it would mean that it would sell the products at  the going international price, which he said would end up higher than current pump price.

Muda Lawal, director-general of the  Lagos Chamber of  Commerce and Industry, said it is a welcome development that a major private  investor is taking  part in the downstream sector, especially  in refinery. “Over the years the government did not have the capacity to run refineries, hence the huge sums spent on the importation of refined products that have been putting pressure on the nation’s foreign exchange”.

He said the Dangote Refinery deserves to be supported, even as he cautioned that a major reform needs to take place in the downstream sector before such investment can be sustained.

“The downstream must be deregulated for such investment to be sustainable”, he said.

UOP, the oldest refining technology licensor in the world, which supplies refinery licences across the globe is the architect of the technology being put in place, while Engineering India Limited (EIL) is doing the detail engineering work on the refinery.

The Indian company was awarded a $139 million contract by the Dangote Group.