• Tuesday, July 16, 2024
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The Dangote Refinery and the audacity of big dream

The Dangote Refinery and the audacity of big dream

Background

The much talked about Dangote Refinery and Petrochemicals (the single largest refinery in the entire world and the most consequential single project in recent times) has now been built.

The colourful decoration and ribbon at the frontage of the said subject of a multibillion-dollar Engineering, Procurement, Construction and Commissioning contract is now cut by President Muhammadu Buhari; signaling its official commissioning and possible commencement of operations.

Mr. Dangote himself, has gone on to say that the first petrol product will be ready by July and the NNPC boss, Mr. Mele Kyari, saying categorically that the NNPC Ltd will supply 300,000 barrels of crude for commencement of operations.

This single large infrastructure project, which has taken about a decade, is undoubtedly ‘a game changer and a milestone for Nigeria’s economy’ according to President Muhammadu Buhari. It is noteworthy to say that in the last 100 years, the single kinetic presence in Nigeria’s business firmament is none other than Alhaji Aliko Dangote; a phenomenal investor and the authentic game changer with unimaginable dreams. Such projects are typically undertaken by Governments of sovereign states or subnational Governments, but for an individual to undertake that project is phenomenal.

Interestingly, there has been some bickering over where the large infrastructure ought to have been built, while many believe that it ought to have been erected in the Olokola Free Trade Zone, straddling the states of Ondo and Ogun. It is a known fact that Mr. Aliko Dangote initially designed the project to be domiciled somewhere on the coastline of Ondo State, but was somehow reportedly frustrated by unseen hands within the political space.

The then Governor Babatunde Fashola-led Government of Lagos State grabbed the golden opportunity which has now become a reality. For Nigeria and her Economy, this Project has been an admixture of ‘A Long Walk to Freedom and the “Audacity of a Big Dream’; freedom, being a policy weaning from intermittent shortage of supply of petroleum products and incessant cases of the attendant scarcity that makes Nigerians queue for long hours for Premium Motor Spirit (PMS) and Automotive Gasoline Oil (AGO).

The Dangote Wonderland

Famously referred to as “The Dangote Wonderland” by business mogul, boardroom guru and investor, Mr. Femi Otedola, the Dangote Refinery covers about 2,635 hectares at the Dangote Industries Free Zone Enterprise; more than about 6,000 football fields and about 7 times the size of Victoria Island, with a refining capacity of about 650,000 barrels of crude oil per day; making it the largest single-train refinery in the world (surpassing Saudi Aramco Mobil Refinery’s refining capacity of 400,000 barrels of crude oil per day) with a 900 Kilo-Tonnes Per Annum (KTPA) Polypropylene Plant and a 435MW powerplant capable of supplying about 5 states in Nigeria.

It can meet 100 percent the needs of Nigerian petroleum products demand (Gasoline, 57 million litres per day; Diesel, 27 million litres per day; Kerosene, 11 million litres per day and Aviation Jet, 9 million litres per day) and have a surplus of each of these for export; thereby positioning Nigeria as a significant player in the global energy market.

The refinery is expected to provide a market value of about $11 billion for Nigeran crude oil with about 23,000 Nigerians, living and working on the refinery premises giving jobs to over 40,000 Nigerians with the prospect of employing up to 100,000.

The facility which is designed to process large variety of crudes including many of the African Crudes, some of the Middle Eastern Crudes and the US Light Tight Oil, has about 65 million cubic meters of sand dredged within the period of 18 months, costing approximately 300 million Euros and using the world’s largest dredgers, including CDR International BV (a medium sized Engineering Consulting firm) and Boskalis ( a leading global marine contractor and service provider); both of Dutch origin.

It is noteworthy that asides acquiring about 332 cranes to build up equipment installation capacity and having the world’s largest granite quarry to supply coarse aggregate, stone column material, stone base, stone dust and material for breakwater (10 million tonnes per year production capacity), in a bid to bring over dimensional cargoes close to the site directly, Dangote Group had to develop a port and construct two quays with a load bearing capacity of 25 tonnes/sq metre.

The 6-quay port including a roll-on/roll-off quay has two of its quays capable of handling post panamax vessels to export.

Generally speaking, the $20 billion investment facilitated by a consortium of investors ranging from Development Finance multilaterals and Local Financial Institutions; African Development Bank (AfDB), Africa Finance Corporation (AFC), Africa Export Import Bank (AFREXIM), Central Bank of Nigeria (CBN), Access Bank Plc, Zenith Bank Plc and Guaranty Trust Bank, amongst others, is like a scene from a science fiction movie with vast megastructures, superstructures, huge towers with concrete and steel everywhere.

It’s almost unimaginable the manhours, materials and money that has gone into the construction with about 29,000 Nigerians getting massive training. With the largest single order of 5 SPMs (Single Point Mooring) in the world, the refinery has a self-sufficient marine facility for freight optimization.

The operation of the refinery starts with a SPM (a floating buoy anchored offshore that allows the handling of liquid cargo in areas where dedicated onshore facility for loading and unloading cargo is available) anchored 25km into the high seas. It supplies crude to the refinery through a subsea network of pipelines terminating at the Dangote Trestle.

The trestle pipelines then deliver the content to the crude storage tanks; 16 of them with each holding about 120 million litres in capacity and onward to the crude distillation unit, which is the height of a 40-storey building and the weight of about 320 Adult Elephants. Indeed, it was no mean feat installing the massive equipment, but a synergy between man and machine.

The facility also has a state-of-the-art technology, while adhering to stringent environmental standards. The design of the facility adheres to the norms set by the World Bank, US Environmental Protection Agency and European emission norms.

The petroleum products from the refinery meet the Euro V specifications, which demonstrates commitment to sustainability and reducing environmental impacts. DuPont Clean Technologies was engaged by the Dangote Group to meet emissions targets efficiently with the help of cost-effective technologies and services that offer them value and flexibility while minimizing the impact on the environment.

Dangote Refinery and the Economy Nigeria is practically a mono-economy with a huge dependence on the Petroleum Industry; responsible for about 95% of its foreign exchange earnings and about 80% of budget revenues. The passage of the Petroleum Industry Act ended a 20-year effort to reform Nigeria’s oil and gas sector, with the aim of creating an environment more conducive for growth of the sector.

The completion and commissioning of the refinery is a defining moment for the Nigerian, African and indeed Global Energy Industry. It has the capacity to secure security of supply for refined petroleum products and petrochemicals in Nigeria and the West African Region. It has created a commercial market and a huge step forward in making Nigeria a net exporter of petroleum products.

According to the Nigerian Economic Summit Group, the refinery will create about $21bn market for Nigerian Crude Oil and save about $10 billion in foreign exchange and is expected to attract foreign capital and reduce significantly, Nigeria’s reliance on oil exports.

In effect, Nigeria would be saving and at the same time, generating a considerable foreign exchange. The refinery would not just create both direct and indirect jobs in the region of about 100,000; it would also revalue the Naira, enhance prosperity for the downstream and provide a catalytic growth opportunity for related industries and other businesses.

There would be a tremendous impact on the country’s balance of payment and will propel further growth across the value chain such as textiles, cosmetics and plastics. There is also a potential development of added value in the agribusiness. The facility which can accommodate about 2,900 tankers, would stir a surge in the Real Estate development on the Lekki corridor, capable of accommodating about 33,000 people.

Read also: How Afeximbank emerged largest financier of Dangote Refinery

One interesting fact to note is that the refinery sits on the Lagos-Ondo Ogun coastline boundary with the Ondo end being a beneficiary of the most recent deep seaport declaration by the Federal Government. That axis or corridor is expected to become a regional economic hub, crystallizing huge commercial activities; ranging from Commercial and Residential Real Estate, Coastal and Marine Infrastructure Development, Tourism, Industry and Night Life.

Furthermore, there is an anticipated increase in investment in the logistics and supply chain industry with the economic incentive to invest in trucks and vessels for transporting petroleum products across the country. Infact, the National Association of Road Transport Owners (NARTO) would intensify efforts to seek funding to boost its petroleum production haulage fleet.

Generally speaking, it’s really a welcome development for the Nigerian Economy; more particularly in the wake of a political transition with huge expectations from observers. It is expected that there would also be more investments of this nature; particularly the need to revitalize the already existing refineries in Warri, Kaduna and Port-Harcourt to maximum capacity and more preferably by the private sector.

In conclusion, this world class facility is a testament to the ambitions of the patron, Alhaji Aliko Dangote and by extension, the quest by Nigeria to take charge of its energy future. Aside the fiscal benefits brought by the refinery, it offers the opportunity to maximize the $3 trillion Africa Continental Free Trade Market by becoming a major player in the continent’s petroleum products supply framework by exporting and supplying other African countries.

Ayodeji is a Legal Practitioner, Coastline Development Professional and Investment Policy Advisor.

He can be reached on the email @ [email protected] and on the mobile @ +2349065468318