Dangote Refinery Can Solve Nigeria’s Currency Problems; Catalyzes Economic Development, Says S&P Global

 

●How Dangote reassures the public on the start of petrol production in July 2024

International financial analytics firm S&P Global has described Dangote Oil Refinery and Petrochemicals, a company with an output of 650,000 barrels per day (bpd), as capable of solving Nigeria’s foreign exchange (forex) problem and its enormous pressure on the local currency, the naira, while also catalysing the country’s economic development.

Manhattan-based S&P Global made the announcement during a site visit to the Dangote refinery in Ibeju-Lekki, Lagos, as part of its sovereign credit assessment of Nigeria. The international rating agency’s team was accompanied by officials from the Federal Ministry of Finance.

S&P noted that the world’s largest single-train refining complex would strengthen Nigeria’s oil sector and, more importantly, have a positive impact on its growing economy.

Director and Chief Analyst, Sovereign and International Public Finance Ratings, S&P Global Ratings, Ravi Bhatia, who led the delegation to Lagos, said the Dangote refinery would transform Nigeria into a net exporter of petroleum products. He added that this transformation is expected to boost revenue generation and ease the current pressure on the country’s foreign exchange reserves.

“It’s a very impressive facility, capable of processing 650,000 barrels per day, when it’s at full capacity. It’s the largest single-train refinery complex in the world. It’s come out pretty quickly. Nigeria is a big exporter of crude oil, but it has issues with importing refined fuels. So, there’s a gap in the market where crude can be refined in Nigeria, saving money that way and potentially saving some foreign exchange. That will be good for the economy in the medium term. It looks good from our assessment,” Bhatia said after a more than four-hour tour of the facility.

Also, in a media chat, Vice President, Oil and Gas at Dangote Industries Limited (DIL), Devakumar Edwin, who led the team during the tour of the facility, reiterated that 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. He also revealed that as promised earlier, the company will commence production of premium motor gasoline (PMS) this month (July).

Edwin stressed that the products produced at the $20 billion plant are of high quality and meet international standards, saying it can meet 100 percent of Nigeria’s demand for petrol, diesel, kerosene and aviation jet fuel, with surplus available for export.

The S&P team commended Dangote Industries Limited Chairman Aliko Dangote for integrating advanced technologies and quality control measures, including a state-of-the-art central control unit that ensures seamless automation of operations.

Other members of the international rating agency team include Associate Director, Sovereign Ratings, Maxmillian McGraw; Director, Corporate Ratings, Omegu Collocott; Senior Analyst, Bank Ratings, Charlotte Masvongo; and Director, Financial Services, Samira Mensah.

Edwin said the refinery, which currently operates at a capacity of 350,000 barrels per day, is set to reach a capacity of at least 500,000 barrels per day by July/August, when it will begin refining gasoline and ultra-low sulfur diesel.

He noted that the refinery, designed to process a wide range of crudes, including various African and Middle Eastern crudes, as well as US Light Oil, is Euro V compliant. It is also designed to meet US EPA, European Union (EU) emission standards, Department of Petroleum Resources (DPR) emission/effluent standards and African Refiners and Distribution Association (ARDA) standards.

While noting that most of the refineries were built by foreign companies, he said it was a matter of pride that a Nigerian company had designed and built the world’s largest single-train refinery complex, acting directly as its Engineering, Procurement and Construction (EPC) contractor. The refinery also incorporates a self-sustaining marine facility capable of handling the world’s largest vessels.

“The refinery can produce the world’s best quality products, Euro V grade. It is one of the most energy efficient refineries and is highly environmentally friendly. It is sophisticated with a high level of automation. The world’s largest single train refinery is 100% designed, engineered and built by a Nigerian company as an EPC contractor,” he said.

Nigeria, one of the world’s leading oil producing countries, exports all of its crude oil for refining and then imports refined products due to a lack of operational refineries. Nigeria is estimated to import at least 50 million liters of gasoline per day to meet domestic demand.

According to data from the National Bureau of Statistics (NBS) in its foreign trade statistics for the fourth quarter of 2023, Nigeria spent about N12 trillion on imports of petroleum products in 2023, including premium motor gasoline (PMS), commonly known as petrol. This figure marks an increase of 18.68 percent from the N10 trillion spent on fuel imports in 2022.

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