Dangote Refinery and it’s repercussions on the country’s economy


It has been announced that barring any unforeseen circumstance, the first drop of refined petroleum products from the multi-billion dollar facility is expected this month — May 2023. 

What that means is that very soon premium motor spirit (PMS), popularly known as petrol, and diesel will be powering vehicles on Nigerian roads. 

The facility is estimated to have the capacity to process about 650,000 barrels of crude oil per day, making it the largest single-train refinery in the world. 

With that, at least, Nigerians are covered, as far as local demands are concerned.

Nigerians have, hitherto, continued to endure the hardship occasioned by our lack of national refining capacity, due to the non-operation of the four government-owned refineries in Kaduna, Warri, and (two in) Portharcourt. Nigeria, (in terms of daily output) reputed to be the world’s 15th largest oil-producing country in the world, number one in Africa, and the 6th largest among OPEC (Organisation of Petroleum Exporting Countries) members has heavily and continuously been dependent on imported refined petroleum products to meet domestic needs.

This is because the four aforementioned refineries have become inoperable for years and have, more or less, become historical artifacts that should be converted to assets under the supervision of the National Gallery of Art (NGA), rather than the Nigerian National Petroleum Company (NNPC) Limited, as museums. Remember, these are multi-billion dollar investments established and funded with taxpayers’ money.

But despite their non-functional states, they retain and maintain a robust number of employees who draw fat emoluments monthly. They (engineers and other categories of workers) get paid heavily on a monthly basis, without having produced a litre of any of the refined petroleum products for about two decades

In many respects, the coming of the refinery is expected to act as a spur in linking up the entire value chain of the oil and gas sector. Such a development will no doubt impact positively on other equally important sectors leading hopefully to a robust all round growth of the Nigerian economy.

By numbers, the Dangote Refinery is a massive project. Built at a cost of 19 billion US Dollars, the refinery is of 650,000 barrel refining capacity, making it the largest in Africa. It is also reportedly the largest single train refinery in the world, designed to integrate all the refining processes for the production of its products in one unit. 

Unlike other refineries that have separate units for the processing of products like the premium motor spirit, PMS, used by majority of vehicles, or aviation fuel used by fixed wing and rotating blades aircrafts, the Dangote Refinery uses the latest cutting edge technology in the refining process for its products, thereby minimising production delays and the attendant costs.

In terms of employment opportunities, the Refinery is expected to provide jobs directly and indirectly to about 40,000 persons in the facility and along the value chain of its operations as suppliers, contractors, consultants and the like, all of which will have a positive multiplier effect in other sectors of the Nigerian economy.

But beyond the positive expectations of the coming of the refinery there are critical issues that have to be considered.

It is envisaged that the refinery will meet the entire demand of the Nigerian market for petroleum products and even beyond. Along the line, it is also expected that the importation of such products at great cost to the country will stop or at least be curtailed. Nigerians also expect that the price of petroleum products now unreasonably high in the country will come down and be affordable.

Although, we note that the government has a 20 per cent stake in the refinery, which indicates that it will strategically support the initiative by Dangote, we believe that much more needs to be done to fully optimise the potentials that exist in the oil and gas sector. 

In this regard, Nigerians believe that if the four existing refineries with a combined refining capacity of 450,000 barrels can be refurbished and put to use to complement the 650,000 capacity of the Dangote Refinery, Nigeria can be well on its way to ensuring domestic self-sufficiency of petroleum products at affordable prices, and export the products as well.

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