Nigeria’s Dangote Refinery Generates 1,500MW for Self-Consumption, Easing National Grid Pressure

Date:

  • Dangote Refinery Pays Off $2.4 Billion of $5.5 Billion Loan Amid Sabotage Attempts
  • Diesel Prices Drop from N1,700 to N1,200 per Litre Following Dangote Refinery’s Market Entry
  • Local Modular Refineries Predict Petrol Prices Could Drop to N300/Litre with Increased Production
  • Dangote Refinery Expands Storage by 600 Million Litres, Claims Sabotage from International Oil Companies

Alhaji Aliko Dangote, President of the Dangote Group, announced plans to expand the storage capacity of his refinery by 600 million litres, increasing its total capacity to 5.3 billion litres. Currently, the Dangote Petrochemical Refinery holds 4.78 billion litres of storage for refined petroleum products.

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Speaking at the Afreximbank Annual Meetings and AfriCaribbean Trade & Investment Forum in Nassau, The Bahamas, Dangote alleged that international oil companies had refused to sell crude oil to his refinery in an effort to sabotage his success.

When questioned about the potential impact of his refinery on petrol prices, which hover around N700 per litre, Dangote recounted the dramatic drop in diesel prices from N1,700 to N1,200 following the refinery’s entry into the market. However, he did not confirm a similar outcome for petrol prices.

“The issue of gasoline is certainly a different issue. That one is being dealt with by the government. But let me give you an example. In the diesel, which the industries, transporters and everybody consume; when we first started, it was N1,700, and the dollar conversion was about N1,200 then. Immediately when we started, within two weeks we brought down the price to N1,000. We took it from N1,700 to N1,200 and from N1,200 to N1,700, we have given more than 60 per cent drop in price,” Dangote explained.

Dangote emphasized that the refinery would act as a strategic reserve for refined products, crucial for Nigeria’s energy security. He noted the refinery’s current 4.78 billion litres of various tankage capacity, with plans to add another 600 million litres.

Discussing the resistance faced from international oil companies, Dangote said, “In a system where, for 35 years, people are used to counting good money, and all of a sudden, they see that the days of counting that money have come to an end, you don’t expect them to pray for you. Of course, you expect them to fight back. And I think that is the process that we’re now really going through.”

He revealed that he had been importing crude oil from the United States to feed the refinery, criticizing Nigeria’s history of importing dirty, high-sulfur fuel responsible for many cancer cases. He urged the Federal Government to enforce regulations against such imports.

Dangote also shared an anecdote about being advised by Saudi Arabia’s former Minister of Energy, Khalid Al-Falih, to abandon his refinery project due to its challenges, advice which he chose to ignore.

Local and international “mafia” groups, according to Dangote, have attempted to sabotage his $19bn refinery project in Lagos. He credited banks like Afreximbank for helping him avoid loan defaults during the COVID-19 period.

The refinery project faced significant delays due to land acquisition issues and sand-filling, but Dangote reported that he had already paid off $2.4bn of the $5.5bn loan for the project. He stated, “We have, of course, paid interest and some principal, about $2.4bn. We’ve done very well. We now have only about $2.7bn left to be paid.”

In addition to the refinery, Dangote’s operations generate 1,500MW of power for self-consumption, reducing pressure on Nigeria’s national grid. He highlighted the importance of having dedicated power generation for industrial activities.

Operators of modular refineries recently suggested that the pump price of Premium Motor Spirit (PMS) could drop to about N300/litre once Dangote’s refinery and other local producers ramp up production. They pointed to the drop in diesel prices as evidence of the potential impact on petrol prices.

However, oil marketers have expressed skepticism, arguing that any reduction in petrol prices would be marginal due to the high cost of crude oil, which is priced in dollars.

Despite its vast crude oil reserves, Nigeria still relies heavily on imported refined fuel. Dangote has promised that Nigeria will no longer need to import petrol once his refinery becomes fully operational. Although he initially planned to release PMS into the market this month, minor challenges have pushed this timeline to mid-July.

“We had a bit of delay, but PMS will start coming out by 10 to 15 of July. But then we want to keep it in the tank to make sure that it settles. So by the third week of July, we’ll be able to come out to take it into the market,” Dangote stated.

OyinyeChukwu Paula
OyinyeChukwu Paulahttp://Vetiva%20Research
OyinyeChukwu Paula Position: Business Journalist, Naija247news OyinyeChukwu Paula is an accomplished business journalist contributing her expertise to Naija247news, one of Nigeria's leading news platforms. With a keen interest in economic affairs, financial markets, and corporate developments, Paula brings a wealth of knowledge to her reporting, delivering insightful analyses on the dynamic business landscape in Nigeria and beyond. Education: Paula holds a degree in Journalism from [Abia State University], where she honed her skills in investigative reporting and business journalism. Her academic background laid the foundation for her commitment to delivering accurate and timely news with a business-focused perspective. Professional Experience: Having amassed experience in the field, Paula's journalistic journey has been marked by a dedication to uncovering stories that impact the business community. Her work spans interviews with key industry figures, coverage of market trends, and in-depth analyses of economic policies. Areas of Expertise: Financial Markets: Paula provides comprehensive coverage of financial markets, offering insights into stock movements, currency fluctuations, and economic indicators. Corporate Affairs: With a focus on corporate activities, Paula delves into mergers and acquisitions, financial reports, and the strategies employed by leading companies. Economic Policy: Keeping a watchful eye on government policies, Paula explores their implications on businesses and the broader economy, providing readers with a nuanced understanding of economic developments. Contributions to Naija247news: Paula's bylines at Naija247news reflect her commitment to delivering quality journalism. Whether unraveling complex financial narratives or simplifying intricate economic concepts, she ensures that her audience is well-informed and empowered. Passion for Business Journalism: Beyond the newsroom, Paula is known for her passion for business journalism's role in fostering transparency and accountability. She believes in the power of information to drive positive change and economic growth. In a media landscape marked by rapid changes, OyinyeChukwu Paula stands out as a dedicated business journalist who continues to shape the discourse on economic matters, contributing significantly to Naija247news's mission of delivering credible and impactful news.

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