Olakunle Alake, vice president of Dangote Industries Limited, addressed members of the House of Representatives on Saturday, after the lawmakers toured the refinery and the fertiliser plant. He provided significant insights into the ongoing challenges and milestones of the Dangote Refinery project.
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Here are four critical highlights from Alake’s briefing:
Crude oil supply and forward sales
Alake mentioned that the forward oil sales made by Buhari’s administration created hurdles for securing crude oil for the refinery.
He pointed out the specific contractual obligations that limit access to crude oil, affecting the refinery’s operations.
“The challenges we face are not just about the availability of crude but the terms and conditions tied to these forward sales,” he stated, highlighting the need for more flexible arrangements to ensure steady supply.
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Project viability and operational challenges
Despite visible progress, Alake acknowledged the ongoing challenges in completing and operationalising the refinery. He assured that significant milestones have been reached, with only petrochemicals remaining to be fully integrated by August.
“By September, Premium Motor Spirit (PMS), Automotive Gas Oil (AGO), and all required products will be available, except for petrochemicals,” Alake confirmed.
He stressed that while there are challenges, they are being managed efficiently to meet the project’s deadlines.
Modular refineries and monopoly concerns
Speaking on the obstacles faced by modular refinery license holders, Alake noted that their difficulties are compounded by the lack of a supportive structure for crude supply.
He also dispelled notions of a monopoly, explaining that Dangote Group’s approach is focused on filling gaps in the market and fostering local production.
“We are not in this business to monopolise; we are here to create value and support Nigeria’s economic growth,” he asserted.
Alake urged the government to support equitable practices in the petroleum sector, ensuring that all players can thrive.
Financial support and loan repayment terms:
Alake elaborated on the financial backing received from the former President Muhammadu Buhari’s administration. He clarified that the 70 percent loan repayment was structured to accommodate the project’s long-term viability, despite the refinery not having produced gasoline at the time of approval.
“There is nothing untoward about the transaction. An option was given, and it was a strategic decision made in the best interest of the project,” he said.
