…Refinery Delivered At Total Cost Of $18 billion – Official
The President of Dangote Group Aliko Dangote has said that the newly commissioned Dangote Refinery will supply its first tranche of petroleum products to the market before the end of July.
The Nigerian billionaire businessman said this on Monday at the inauguration of the 650,000 barrels per day (BPD) integrated refinery project located in the Lekki free trade zone area of Lagos state.
The combined refinery and petrochemical complex will create 9,500 direct jobs and 25,000 indirect jobs.
Speaking at the ceremony, Dangote said the commissioning ceremony is the beginning of a great journey, adding that it is a milestone in a new and exciting trajectory for Nigeria’s oil and gas downstream sector.
He said: “It is our firm commitment that we will replicate in this sector what we have actually achieved in the cement and fertilizer markets while Nigeria transformed from being the largest importer of these crude products to a net exporter.
“Our first goal is to ramp up projections of various production to ensure that within this year, we are able to fully satisfy our nation’s demand for higher quality products to enable us to eliminate the tragedy of import dependency and stop, once and for all, the dumping in our market of toxic substandard petroleum products.
“Our first products will be in the market before the end of July, beginning of August this year.
“The company will ensure that its plants are run at the highest capacity utilisation and the highest efficiency to enable the refinery to export competitively to other markets.”
He added that the operationalisation of the refinery is a clear opportunity for Nigeria given the African Union’s commitment to the creation of an African common market through the recently established African Continental Free Trade Area (AfCFTA).
Furthermore, he said once the plant is fully commissioned, it is expected that at least 40 percent of the capacity will be available for export, adding that it will result in significant foreign exchange into the country.
Furthermore, the Dangote refinery was established at a total cost of $18 billion.
This is according to Mr. Godwin Emefiele, Governor of the Central Bank of Nigeria (CBN). He stated this while giving a speech at the commissioning of the Dangote refinery in Lagos state earlier today, May 22.
According to Emefiele, the Dangote Group and the CBN partnered on the refinery project so that there will be a successful completion of the project with over N125 billion to cover domestic currency requirements and to ensure that there was availability of foreign exchange to pay for equipment imports needed. It is important to note that in 2013 when Dangote first indicated interest in setting up a refinery, the total cost was budgeted at $9 billion.
However, by 2017, the refinery set up costs had escalated from $9 billion to $18.5 billion with 50% equity investment by Dangote and 50% debt finance by local banks. Emefiele said:
“The commercial loan component of the project was financed by domestic banks with the balance from foreign banks. I am delighted to announce that the Dangote Group paid down some portion of commercial loans before the refinery’s commissioning. As of today, total loans outstanding have dropped from over $9 billion to $2.7 billion.”
“This reflects the astute creditworthiness and commercial capability of the Dangote Group. Please permit me to appreciate all the participating local banks, who provided immense support to the refinery project because they were aware of the importance of the project.
“Even when interests and principal payments were almost overdue, they were patient.”
Backstory
Recall that in January 2019, Emefiele announced that the CBN would provide a N75 billion financial facility for the Dangote refinery project. At the time, Emefiele also said that Aliko Dangote had already invested about 50% of the $9 billion dollars needed to complete the project, while the remaining 50% will be sourced as loans from both local and foreign lenders.
Also in September 2021, Emefiele said the Dangote refinery would help achieve the import substitution objective of the apex Bank, which means that products that were imported would be produced locally. Thereby saving foreign exchange that the CBN uses to fund the import of these products.
During his speech at the commissioning of the Dangote refinery earlier today, the CBN Governor, Emefiele said the refinery operations will have surplus products available for exports which will aid domestic production needs but also help in generating export revenues for Nigeria. According to him, Nigeria can be self-sufficient in all products that the country consumes.
