In 2020, the price of imported refined petroleum products was $43.56 billion higher than the price of petroleum exports. Now you understand why Mr. President himself had to witness the opening of the Dangote refinery. For emphasis, Nigeria refines almost none of its own crude oil, placing a backdrop on its vast petroleum resources.
The Dangote Refinery has a daily capacity to refine 650,000 barrels of crude oil. The refinery is situated in Lagos’s Lekki Free Trade Zone. The successful daily functioning of the Dangote Refinery will ensure that Nigeria is self-sufficient in the local refining of crude oil, among many other economic imperatives, saving scarce foreign currency that would otherwise be utilized to import petroleum products into the country.
The refinery design incorporates innovative technology and complies with international standards set by the World Bank, US EPA, European Union, and Department of Petroleum Resources (DPR).
It is made to process a wide range of crudes, including a lot of Middle Eastern and African crudes as well as US light-tight oil. Dangote Group increased its capability for equipment installation by purchasing 332 cranes.
Dangote Group was required to build two quays with a load-bearing capability of 25 tonnes/sq meter in order to develop a port and enable the direct delivery of over-dimensional commodities to the site. Two additional quays with a combined capacity of up to Panamax ships and two quays for handling liquid cargoes were built in the port. There will be a roll-on/roll-off quay among the port’s six quays.
What excites Nigerians the most are not these specifications or the 177 tanks with 4.742 billion litres capacity. It is the promise of some levels of self-sufficiency and employment.
Why this must be Sustained
Currently, there are four refineries in Nigeria that are operated by the Nigerian National Petroleum Corporation (NNPC). According to a report from the NNPC, the four refineries in Nigeria functioned on average at 10.46% of their combined daily capacity of 445,000 barrels. Nigeria produced 1.6 million barrels of oil per day on average in 2021, a record low for the time period under consideration. Figures fell by about 540 thousand barrels per day between 1998 and 2021.
Nigeria has abundant oil reserves, but the country’s over 200 million people are experiencing a growing fuel crisis due to a lack of processing capacity at its current oil refineries. The nation’s socioeconomic development has been limited by this. It burdens the government with high subsidy costs and has long made Nigeria dependent on imported petroleum supplies.
Also read: Does Nigeria really need Fuel Subsidy?
Nigeria arguably imports more refined petroleum products than any other country on the continent, which provides a lucrative market for refineries, particularly in Europe and the US. The country spent ₦1.79 trillion on the importation of PMS in the fourth quarter of 2022 alone.
Nigeria can save up to ₦1.02 billion daily by using the Dangote refinery’s installed capacity. That amounts to ₦91.8 billion in just one quarter. This will allow the nation to refocus its financial resources on other essential priorities at the state level, such as infrastructure, agriculture, and education.
For the Common Nigerian
The Dangote refinery promises Nigeria a degree of macroeconomic self-sufficiency that would provide capacity for refined products, which will now move to the export market. At the level of the individual, it will assist in meeting Nigerians’ rising demand for refined petroleum products.
The Major Oil Marketers Association of Nigeria (MOMAN) stated in January this year that the gasoline shortage crisis in Nigeria was caused by the high cost of vessels and the lack of appropriate vehicles to transport petroleum goods from depots to filling stations around Nigeria.
The Nigerian Association of Road Transport Owners (NARTO) has declared that it is looking for finance to expand its operation to meet the future demand for the haulage of petroleum products from the Dangote Refinery in light of the refinery’s opening.
The refinery would add to the creation of jobs by directly and indirectly removing thousands of Nigerians from the labor force. The pressure to source the dollar to import petroleum products will be removed, which will increase savings in foreign exchange and improve the value of the Naira.
It’s important to note that Dangote Refinery is a private organization whose major goal is to maximize profits. The Dangote Refinery would be motivated by a niche to produce profits, as opposed to state-owned refineries. Nigerians are not expecting them to be unproductive.
