“The only way to move Africa forward is for people like us to take very bold moves”, Aliko Dangote, Africa’s richest man said in an interview with Bloomberg, in August 2017. The interview dwelt extensively on his bid to deliver Nigeria’s first privately owned refinery in 2019, the largest single train petroleum refinery in the world with a production capacity of about 650,000 barrels per day (bpd).
Towards the end of 2017, Nigerian business mogul and philanthropist, Segun Adebutu, made a similarly bold move. He revealed his plan to build a 250,000bpd refinery by 2022. Adebutu made this public at the commissioning of the first phase of projects at Petrolex Mega Oil City, Ibefun-Ogun State, where the refinery will be built. An energy city that already houses a 300 million-litre tank farm (sub-Saharan Africa’s largest petroleum bulk storage facility) and in a couple of years, will become the largest petrochemical hub in the region.
Aliko Dangote heads Dangote Group, the most diversified manufacturing conglomerate in Africa, while Segun Adebutu sits atop Petrolex Oil and Gas Limited. With their combined effort, they are being looked upon as the messiahs of Nigeria’s oil and gas sector; the men who will spur the growth of the refining sector and save the country from its huge dependence on importation of fuel, which continually strains the economy.
Despite being one of the largest crude oil producers in the world, Nigeria’s government owned four refineries, with a combined capacity of 445,000 barrels per day are barely able to function at 20 percent capacity. Years of neglect and failure by successive governments to maintain and upgrade them in over two decades have left them beyond repair.
According to recent figures revealed by the Minister of state for Petroleum, Dr. Ibe Kachikwu, Nigeria allocates an average of $28 billion of its foreign exchange earnings yearly to import about 92 per cent of the petrol consumed locally.
The importation has created huge burden on the government, especially because of the price disparity that often occurs in the landing cost of petrol and government approved sales price. The attendant margin, also known as subsidy, has been fully borne by the government, consuming huge chunks of the yearly budget and creating wealth for corrupt individuals who present fictitious import figures.
Intermittently, the nation has also consistently suffered from fuel scarcity which cripple economic activities and make life hard for the masses.
Nigerian government earnestly waits on private sector players like Dangote and more recently, Adebutu to come to the rescue, after several failed attempts to ramp up production from state-owned refineries. The government, battling shortage and pressure caused by subsidy controversy in the past few months, has run out of options on how to create stability in the sector without going back to fund fraudulent subsidy claims.
While Dangote’s 650,000 bpd refinery has been heralded as a crucial development, Adebutu’s 250,000bpd refinery which is also in the pipeline signals Nigeria’s strong drive not just to break from the jinx of importation, but to occupy a leading position as net exporter within or beyond the West African region in the next couple of years.
“We have actually never failed in delivering any project…. This is my lifetime project. I have to back it up with my own life to make sure it is delivered. I know that, yes, it’s true, a lot of people have tried to deliver on refineries in the past, mostly governments. They couldn’t”. Dangote said, convinced that this time it will be different.
Dangote has invested $5 billion into sugar, rice, and dairy production and now, in one breath, he is pouring $14billion into the construction of an oil refinery. It has been described as a big risk for a man who has never dealt in oil.
Segun Adebutu said “I didn’t just wake up to this project; being in the sector for 14 good years, it was evident that something had to be done. Nobody is going to fix this country for us. We have no refinery working at optimum capacity in Nigeria despite being one of the largest oil producing countries in the world”.
Apart from the need to help Nigeria achieve optimum refining capacity and save its import-reliant economy from complete collapse, Adebutu was spurred to embark on the project in a bid to decongest the Apapa axis in Lagos, which has become a nightmare and a ticking bomb because of the concentration of tank farms in the residential area.
He figured that something must be done, and the most sustainable way was to have clusters outside the area, where products can be refined, stored and by-products passed to feedstock industries.
His mega oil city, upon completion, is expected to cater for about 60 per cent of in-country fuel distribution needs. It will also create job opportunities to over 10,000 Nigerians directly and indirectly.
Similarly, Dangote said his refinery will be creating about 4,000 direct and 145,000 indirect jobs…save over $7.5billion for Nigeria annually and generate an additional $5.5billion.
- David Oluwaseyi is a social commentator. He writes from Abuja.
