FINALLY! Buhari sets to commission $19bn Dangote refinery a week before May 29 handover date 

Oredola Adeola

The much-awaited inauguration of the 650,000 barrels per day multi-billion Naira Dangote Refinery and Petrochemical company located in Lekki Free Trade Zone; Lagos has been fixed for May 22, 2023.

 Mr. Anthony Chiejina, Group Chief Branding and Communications Officer, Dangote Industries Ltd., confirmed this in a statement obtained by EnergyDay on Sunday.

 Bashir Ahmad, Special Assistant to President Muhammadu Buhari on Digital Communications, in a tweet also confirmed the planned inauguration.

According to him, efforts by the Federal Government to make Nigeria self-sufficient in local refining of crude oil to save the scarce foreign exchange used in the importation of petroleum products have received a boost as the 650,000 barrels per day Dangote Refinery, the world’s largest single-train refinery, is set for inauguration on May 22nd, 2023, by President Muhammadu Buhari.

EnergyDay confirmed that the new date for the inauguration of the refinery in the next two weeks would be Buhari’s second visit to the Dangote facility in the Lagos Free Trade Zone, Ibeju-Lekki, after the inauguration of the three million metric tonnes Dangote Fertiliser Plant in Lagos in March 2022.

The Dangote Refinery complex located in the Lekki Free Zone area of Lagos, covers a land area of approximately 2,635 hectares, is said to be worth $19billion, is touted as the largest Oil Refinery in Africa and Largest Single Train in the World with Nelson complexity index (NCI) of 10.5 (average in Europe is 6.5).

As Nigerians waited with bated breath for the production of petroleum products in the refinery expected to end the country’s reliance on imports-refined petroleum products, EnergyDay confirmed that there have been several promises made in the past in respect of the take-off of the refinery which were not fulfilled.

The years of several delays in the take-off of the refinery, according to findings by EnergyDay, had increased the cost of Dangote’s refinery from earlier estimates of $12-$14 billion to $ 19 billion.

The most recent takeoff of the refinery was the proposition made by Mr. Devakumar Edwin, Group Executive Director, Strategy, Capital Projects & Portfolio Development, Dangote Industries Limited, that the refinery would come on stream by the fourth quarter of 2022, which was not fulfilled.

Billionaire Aliko Dangote later revealed in an interview that the refinery was expected to be commissioned before the close of President Muhammadu Buhari’s presidential term, in 2023.

Meanwhile, Alh. Dangote had hinted that the refinery will start by processing 540,000 barrels per day (BPD), before achieving its full capacity of 650,000 BPD months after take-off.

The 540,000 barrels per day proposed by the Dangote refinery according to checks by our correspondent translated to 39,420,000 litres of petrol per day.

Mele Kyari, Group Chief Executive Officer, Nigerian National Petroleum Company Limited (NNPCL), in August 2022, hinted that the refinery will finally start operations by the First Quarter of 2023 or latest mid-2023.

The NNPCL GCEO made having confirmed the national company’s 20 percent stake in the project. According to him, the projection is the first quarter, but we think that it can come up by the middle of next year.

EnergyDay had in a report published in 2022, confirmed NNPCL’s two-way transactional relationship with the Dangote Refinery’s 650,000 bpd facility, under a strict contractual agreement including the option to exercise the ‘Right of First Refusal.

Based on the deal, the NNPCL was expected to provide crude oil supplies to the refinery in exchange for finished petroleum products over a period of 20 years through a contractual arrangement that will be strictly toy-binding.

EnergyDay gathered that the deal between the NNPCL and Dangote includes the agreement for the national oil company to sell up to 300,000 barrels of crude oil to the Dangote refinery for the next 20 years, as well as its access to 20 percent production from that plant.

Although there was no explanation in respect of critical details of the arrangement on the cost of crude supplies, the pricing template and key economic factors are yet to be disclosed.

EnergyDay’s inhouse industry analyst is of the view that the participatory interest of  NNPC Limited in the Dangote Refinery could help to safeguard the economic supply of feedstock into the refinery, and in turn, protect Nigeria’s crude oil sales market as the country navigates more carefully into the era of cleaner fuels.

Now that another new date has been confirmed by the company and an aide of outgoing President Buhari, the expectation is high as many Nigerians are hopeful that the country would use the opportunity of the private refinery to unlock the country’s huge resource potential, grow its economy and entrench diversification.

Energy industry experts have suggested that the Dangote Refinery will in a way, end the country’s over N4trn estimated annual spending on fuel subsidy.