We’ve enough to meet Nigeria’s petroleum needs – Dangote

…as Zambia seeks Dangote investment in energy sector

Aliko Dangote, President of Dangote Group and Africa’s richest man, has said that his refinery has enough petroleum products to meet 100% of Nigeria’s petroleum needs.

He made this assertion over the weekend during a tour of the refinery by Makozo Chikote, Zambia’s minister of energy.

Dangote said his $20 billion facility currently holds nearly five billion litres of refined petroleum products, including petrol, diesel, and aviation fuel worth six hundred billion naira “enough to meet 100% of Nigeria’s requirements.”

“We can store up to 4.74 billion litres of various products. So it also acts as a strategic reserve for the country,” Dangote said, adding that his refinery “can store more than a month’s requirement of diesel and almost 18 days’ requirement of petrol” for the whole country.

His comments come as Nigeria grapples with fuel shortages and rising energy costs. The facility, with a processing capacity of 650,000 barrels per day, is designed to reduce the country’s reliance on imported fuel and beat down prices through local refining.

Edwin Devakumar, vice president of Dangote Industries Limited, stated that the refinery can meet all of Nigeria’s needs while also supplying exports. “The local consumption is just around 46 million litres, and the remaining 58 million litres will be exported daily. Forty-four percent can meet the entire requirements of Nigeria, and 56% of the production would be exported,” he said.

“Every day, we produce lighter products of 104 million litres; 57 million litres of petrol; 20 million litres of jet fuel; and 27 million litres of diesel.”

However, Dangote acknowledged that the refinery’s journey has been anything but smooth. He revealed that the project faced significant setbacks, including a three-and-a-half-year delay due to land disputes, which resulted in losses amounting to $600 million “in time,” despite an initial $2.5 billion withdrawal from the banks.

Additionally, he lamented Nigeria’s infrastructure challenges, particularly the lack of local production capacity for critical materials.

“Everything we use is imported. Not even nuts and bolts are produced in Nigeria. The only thing local is probably iron,” he said. Dangote also reflected on Nigeria’s economic turbulence, particularly the impact of currency devaluation on businesses.

He pointed out that the naira’s depreciation, “from N156 per dollar to over N1,900 before retreating to around N1,600,” had created an unstable business environment.

“Because we had a stable currency for maybe 10 years at one point, and then suddenly, we saw it move dramatically. We went through all these turbulent periods,” he said.

Read also: Dangote Refinery produces 57 million litres of petrol daily, meets Nigeria’s local demand

Zambia seeks a slice

Makozo Chikote, Zambia’s energy minister, lauded Dangote’s resilience while stressing the importance of his country’s collaboration with his company, particularly in securing petroleum supplies for Zambia’s growing economy.

“In Zambia, 100 per cent of our petroleum is handled by the private sector. We are looking at Dangote coming on board, which would lead to efficient, reliable, and competitive products,” Chikote stated.

Zambia doesn’t refine fuel to meet demand, the country has to import most of it. In 2021, the Zambian government restructured its only refinery INDENI to process refined fuel instead of crude, after it faced multiple closures due to maintenance issues and a lack of crude supply.Now the country looks to Dangote for stability in its fuel prices.

“We have learned so many advantages of bringing players on board for competition, which will result and trickle down to affordable products for the ordinary and commercial players back home.

“We need to promote trade within Africa. It is high time that we supported our locals. Other private sector players can learn from what Dangote has done,” he said.

Dangote shared this perspective, reiterating that his refinery was built with Africa in mind. “It’s an African refinery. We need to promote this AfCFTA. Right now, our main focus is to see how we trade with other African countries,” he said.

He assured that we’re going to give the “best quality”to Zambia at the “best prices with continuous supply”

“We’re going to give them energy security and we’ll build some fuel tanks to make sure that the security is there,” he assured.

He also revealed that Dangote Group is considering infrastructure investments to facilitate the movement of petroleum products across Africa, including pipelines to reduce transportation costs.

“The essence of that is to reduce road transportation costs, which are very high. If we can pump products through a pipeline, it will significantly cut expenses and improve efficiency,” he said.

Samuel Maimbo, former Vice President of budget and strategic planning at The World Bank, underscored the necessity of private sector investments in Africa’s energy sector.

“There is not enough government funding to develop Africa. The only way we finance Africa’s growth at a pace and scale that solves our problem is working through the private sector,” he said.

Despite Nigeria’s economic turbulence, Dangote remains ambitious. He revealed plans to grow his company’s revenue from $4.5 billion to $30 billion within the next five years, leveraging industrial projects like the refinery and other ventures.