﻿Nigeria’s oil refining renaissance - dangote's $15bn oil refinery plant
In the modern history of African industrial progress, Alhaji Aliko
Dangote has proven to be a prototypical industrialist and outstanding entrepreneur.
He managed to accomplish it in the cement industry, did it again in the sugar refining
industry, revolutionized commodity production, and thus is poised to do it in the petroleum
downstream sector. After the government, he is Africa's largest individual employer of labor.
Hundreds of thousands of households benefit economically as a result of
the jobs produced by this innovative goal-setter and brave investor.
XCMG Construction Machinery will collaborate with Dangote Industries Limited on the world's largest
oil refinery project, which will be located in the Lekki Free Zone in Lagos, Nigeria.
This refinery is owned by the Dangote Group, but Nigeria and Nigerians will benefit the most from
the new order that this great national enterprise is about to usher in in their downstream sector.
Dangote Refinery is indeed coming to the rescue.
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Nigeria, Africa's largest oil producer, currently has four oil refineries in operation. The plants,
however, are in a condition of partial shutdown due to old equipment and inadequate maintenance,
with a total daily output of less than 445,000 barrels, while average daily demand is around
40 million liters, which is 7 million liters less than what is produced locally.Nigeria
is the only crude oil producing country that relies on imported
refined goods due to the four refineries' repeated failures, which is rather sad.
This incompetence of local refineries developed an abysmal body of corruption termed subsidy regime,
wherein , an economic sabotage cartel, has abundantly hemorrhaged the country,
which has pushed corruption in the petroleum industry to stratosphere levels. The nation's
economic string has been stretched past its elastic limit by the importation of gasoline.
The nations foreign reserves have been severely drained, limiting the ability of the Central
Bank of Nigeria, the country's apex bank, to stable the local currency, the naira.
These anomalies have caused uncertainty in the downstream industry, which has resulted
in vulnerability and volatility. An average Nigerian on the street is
always afraid and concerned about when the next fuel shortage would strike.
For a long time, Nigeria has lacked sufficient petroleum supplies. Petrol shortages are common
during the holiday season, turning what should be moments of joy into moaning. Increases in
gasoline costs frequently coincide with increases in inflation, making life even more difficult for
the already impoverished masses. Nigeria is in desperate need of assistance. The effects of the
Covid-19 outbreak, as well as the unprecedented drop in oil prices, which account for more than
90% of the country's foreign exchange earnings, are wreaking havoc on the country. Since March,
it has been obliged to deflate its currency, the naira, twice and seek its first-ever loan from the
International Monetary Fund, which predicts a 5.4 percent economic contraction in 2020.
The petrochemical complex is daunting even for Dangote, who has developed a commercial empire
that includes cement factories across Africa and businesses ranging from sugar mills to salt
refining facilities. The tunnel has a light at the end of it. According to its chairman, the Dangote
Oil Refinery will be completed by the end of 2021 and operational in the first quarter of 2022.
Nigerians should rejoice at this encouraging news. When fully operational, the 650,000 barrel per
day refinery will be able to fill the void, with adequate capacity to meet the country's refined
product demand of less than 600,000 barrels per day while still exporting to other nations.
For the first time, a country with a population of over 200 million people—the
world's most populous black nation—will be self-sufficient in its refining capacity.
This is a turning point in the country's tumultuous history.
When the refinery is operational, the burden on Nigeria's foreign reserves will be relieved,
the naira will strengthen, and hundreds of thousands of jobs would be created for
the country's teeming unemployed..And, as a result, insecurity will decrease,
because enormous unemployment is inextricably linked to the country's withering insecurity.
When a young person is employed, he will not have the leisure to engage in social vices.
This refinery is owned by the Dangote Group, but Nigeria and Nigerians will benefit the most from
the new order that this great national asset is going to usher in in our downstream sector.
Projects Progress
Construction machinery manufacturer XCMG Construction Machinery has dispatched a
team of 81 engineers and technicians to work on the building of the Dangote Refinery. More than
2,500 units of construction mechanical equipment will be serviced end-to-end, around-the-clock
by the team. The Dangote Refinery project, which cost roughly $35.38 billion to build,
spans 250,000 hectares. The project's first and second phases are planned to be finished by 2022.
The refinery will manufacture gasoline and other petrochemical goods such as polyethylene
and polypropylene once it is fully operational.
Jiansen Liu, XCMG's vice-president and general manager of XCMG Import and Export Company
mentioned that the refined oil output of Dangote Refinery will meet Nigeria's gasoline demand
satisfactorily, even satisfying West African need for refined oil, liberating Nigeria from
its reliance on oil imports. To be effective, the refinery will also need to eliminate the cartels
that have dominated Nigeria's fuel-import market for more than two decades, providing a source of
money for the politically connected and motivation for domestic refineries' continued dysfunction.
However, once operational, it might serve as a powerful symbol of industrial development in a
country that has experienced numerous false dawns in its quest to reduce its reliance on crude oil.
The XCMG team overcame various hurdles, including road conditions that necessitated leveling with
road rollers and graders, as well as excavators digging canals for drainage every few days.
To transport big cargoes, roads and jetties had to be built, and a quarry with a storage
capacity of 10-million tonnes of granite had to be dug specifically for the project.
The Dangote Group has chosen to concentrate on skill development and capacity development.
They've already trained nearly 300 people from the host communities and surrounding areas.
And have sent over 200 engineers overseas to learn the ins and outs
of operating refineries so that they may return home and operate their own.
In addition, about 45,000 residences have been constructed on the site.
The initial plan was for roughly 25,000 houses, but they decided to take measures so that if
there is a sudden delay and a need to hurry the work, there will be enough housing for workers.
When the pandemic lockdown occurred, they didn't have individuals coming from outside
and going back outside every day because they were able to bring all of them inside
and keep them within. As a result, there was no halt in the project's progress.
Environmental concerns
Dangote will face a more complex challenge with the refinery's environmental impact than
with COVID-19. The global shift among corporate multinationals and governmental agencies toward
disingenuous support for “clean fuel” standards is a likely factor in the Dangote refinery risk
assessment. Alternatives to imported dirty petroleum have also been promoted by African
industrial groups and the African Union, and Dangote has pledged climate-friendly refining
technologies. Despite these assurances, construction on the new Dangote site has
been a nightmare of pollution, with significant drilling and pipeline and road construction.The
already congested urban area is now facing rising traffic congestion as well as the potential of
groundwater contamination. The region's fish are disappearing as a result of these activities.
According to former fisherman Ayo Falade, “the dredging of the shoreline to sand fill [Lekki
Lagoon] for the construction of the refinery caused the fish in the area to disappear.
To get fish, we had to travel far out into the ocean, but even that was risky because the waves
were unpredictable. A conservationist approached us and informed us that the sand-filling was
altering the local ecosystem.” Oil spills are another big risk once the refinery is running.
For decades, environmentalists and community activists have
spoken out and campaigned against the oil industry's dominance in Nigerian society,
most prominently in the oil-producing Niger River Delta region.
As in other parts of the world, the desire for a civilization based on renewable energy sources is
gaining traction. Although Dangote claims that the refinery will minimize pollution and the
environmental impact of oil, these measures are insufficient to address the ecological crisis.
No amount of clean technology, industrial progress, or GDP increases will prevent
the economic and climate challenges that are inextricably linked to profit-driven extraction.
Only community organizers who mobilize that vision of re-imagination will be able to
compel the structural change that is desperately desired.
The Benin City-based ecological think-tank Health of Mother Earth Foundation in one of
it's write ups remarks that "With fossil fuels driving climate change and surely entering its
last phases as a dominant energy source, the development of the Niger Delta requires urgent
re-imagination….The route to bringing into fore truly sustainable development of the
Niger Delta will come through the recognition and development of indigenous knowledge,
clean-up and restoration of the region and a development of a pathway based on sustainable
biodiversity management that maintains the full ecological integrity of the region."
Despite its claimed institutional commitment to renewable energy, the World Bank is funding
the project. Meanwhile, the National Assembly is debating Nigeria's long-awaited Petroleum Industry
Bill (PIB), which includes provisions for a host community fund ostensibly to compensate
oil-producing regions for environmental damage. The PIB, on the other hand, leaves it
up to the firm to decide what constitutes a "host community." Overall, the new oil refinery reflects
the larger framework of a state and global capital rooted in a fossil-fuel-based energy system.
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