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Dangote Refinery Poised to Transform Nigeria’s Economy and End Forex Woes, Says S&P Global

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An image of Dangote Refinery

Nigeria’s foreign exchange woes and reliance on imported refined fuels could soon be a thing of the past, according to a recent assessment by S&P Global, with the imminent full operation of the Dangote Oil Refinery and Petrochemicals company.

The optimism stems from a visit by S&P Global to the Dangote Oil Refinery and Petrochemicals company, located in Ibeju-Lekki, Lagos. The 650,000 barrels per day (bpd) refinery, touted as the largest single-train refinery complex in the world, is expected to significantly impact Nigeria’s economic landscape.

Transforming Nigeria from Importer to Exporter

S&P Global analysts, led by Director and Lead Analyst, Sovereign and International Public Finance Ratings, Ravi Bhatia, were impressed by the refinery’s capabilities. Bhatia noted that the facility would transform Nigeria into a net exporter of petroleum products, a significant shift for a country that currently exports crude oil but relies heavily on imports for refined fuels.

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“This will be positive for the economy in the medium term,” Bhatia remarked after an extensive tour of the refinery. “It is a very impressive facility, able to process 650,000 barrels a day, when in full capacity.”

Boosting Revenue and Saving Foreign Exchange

The refinery’s impact is expected to be multifaceted. Increased domestic refining capacity is anticipated to generate additional revenue for the country. More importantly, it is projected to alleviate the pressure on Nigeria’s foreign exchange reserves, currently strained by dependence on imported fuels.

Despite being a major crude oil exporter, Nigeria lacks sufficient refining capacity, forcing it to import refined fuels like gasoline and diesel. The Dangote Refinery, Bhatia noted, has the potential to bridge this gap and transform Nigeria’s position in the global oil market.

“Nigeria is a big exporter of crude but has issues with importing refined fuels,” Bhatia explained. “So, there is a gap in the market where crude can be refined in Nigeria, save money that way, and potentially save some foreign exchange.”

Dangote Refinery Makes History

Devakumar Edwin, Vice President of Oil and Gas at Dangote Industries Limited (DIL), echoed the positive outlook. He emphasized the refinery’s potential to create a ripple effect of economic benefits.

He explained that the $20 billion refinery is designed to harness Africa’s abundant crude oil resources to produce high-quality refined products locally. This approach, Edwin believes, will create a virtuous cycle of industrial development, job creation, and economic prosperity for Nigeria

“By harnessing Africa’s abundant crude oil resources to produce refined products locally, the company aims to catalyse a virtuous cycle of industrial development, job creation, and economic prosperity,” Edwin stated.

Another noteworthy aspect of the Dangote Refinery is its status as a completely Nigerian-owned and operated project. Edwin highlighted the fact that a Nigerian company designed, constructed, and serves as the EPC (Engineering, Procurement, and Construction) contractor for the world’s largest single-train refinery complex.

“The refinery can produce the best quality products in the world, Euro V grade,” Edwin said with pride. “It is one of the most energy-efficient refineries and it is highly environmentally friendly. The largest single train refinery in the world is 100 percent designed, engineered, and constructed by a Nigerian company as EPC contractor.”

High-Quality Products and Advanced Technology

The refinery boasts not only its processing capacity but also the quality of its output. Products are designed to meet Euro V specifications, US EPA norms, and African Refiners and Distribution Association (ARDA) standards, adhering to stringent international environmental standards.

The facility also incorporates advanced technology, including a state-of-the-art Central Control Unit for smooth automation.

The S&P Global team commended Dangote Industries Limited President Aliko Dangote for his commitment to innovation and quality control.

Production to Begin Soon, Meeting Domestic Needs and Export Potential

Exciting news for Nigerians is the imminent commencement of production at the Dangote Refinery. Edwin revealed that the company will begin producing premium motor spirit (PMS), also known as petrol, this July. The refinery, boasting a capacity to meet 100% of Nigeria’s demand for petrol, diesel, kerosene, and aviation jet fuel, will also have a surplus for export, generating additional revenue for the nation.

Currently operating at 350,000 bpd capacity, the refinery is projected to ramp up production to at least 500,000 bpd by July/August. This will see the commencement of refining petrol and ultra-low sulfur diesel.

The refinery is designed to process a wide range of crude oil sources, including various African and Middle Eastern crudes, US Light Oil, and adheres to stringent environmental regulations.

Read Also: Dangote Refinery to End Nigeria’s Fuel Imports and Transform Africa’s Energy Landscape

If You Ask Me

Nigeria’s current situation of exporting crude oil and importing refined products is a paradox the Dangote Refinery aims to rectify. Prior to the refinery’s operation, the country relied on imports exceeding 50 million litres of petrol daily to meet domestic needs.

The Dangote Refinery’s arrival signifies a potential turning point for Nigeria’s economy. With its ability to not only meet domestic demand for refined products but also generate a surplus for export, the refinery holds the promise of a more prosperous future for the nation.

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