Big Wins from Dangote Refinery

By Yange Ikyaa

The Dangote Refinery and Petrochemical Company recently commenced production seven months after it was inaugurated and the commencement of crude oil refining at the facility has generated a lot of excitement and anticipation.

Dangote Refinery is a 650,000 barrels per day (BPD) integrated refinery project and occupies a land area of 2,635 hectares near the Lekki Lagoon in the Lekki Free Zone in Lagos. It will be able to transship refined petroleum products to international markets from this location.

It is the Africa’s biggest oil refinery and the world’s biggest single-train facility. The facility is expected to process crude oil grades from Africa, Asia and America, with a delivery of a surplus of close to 38 million litres of petrol, diesel, kerosene and aviation fuel for Nigeria daily. It is gratifying to note that the refinery can meet 100 per cent of Nigeria’s requirement for all refined products (Gasoline, 57 million litres per day; Diesel, 27 million litres per day; Kerosene, 11 million litres per day and Aviation Jet, 9 million litres per day) and also have a surplus of each of these products for export.

The refinery is expected to save the country huge forex of around $26 billion, that would have been used for fuel, petrochemical plants and fertiliser importation. Aside from the nearly US$26 billion foreign exchange savings from the reduction in petroleum imports, the Nigerian economy is projected to benefit an extra US$10 billion of foreign exchange inflow annually through the export of refined petroleum products, which will further boost the country’s official reserves and enhance exchange rate stability.

Jobs and taxes

In addition to other positive impacts from the Dangote Refinery, Nigeria would reap enormous benefits with direct jobs and indirect jobs to the teeming populace.

The construction phase of the project alone was said to have created over 10,000 direct and indirect jobs, with the operational phase expected to provide even more employment opportunities. According to the Head, Quality Assurance/Quality Control, Dangote Oil Refinery Company Limited, Rama Rao Putta, the refinery would create 100,000 indirect employments through retail outlets and ease availability of petroleum products in the country.

This would help to reduce the high unemployment rate in the country and improve the standard of living for many Nigerians.

Real estate, the big beneficiary

The emergence of the Dangote Refinery has stimulated commercial industries like the Lekki Seaport and this has further spurred real estate investment in the surrounding areas, bringing about a wave of opportunities for real estate investors.

As the refinery becomes operational, property values within the refinery corridor have started to appreciate significantly as demand continues to rise.

The influx of refinery workers and other support service providers seeking accommodation has driven up the demand for rental properties. Real estate investors are capitalizing on this opportunity by acquiring residential properties.

The Lekki Free Trade Zone, located within the Ibeju-Lekki-Epe axis of Lagos State, houses the Dangote Refinery and other industrial projects. According to reports, the last 6 years has seen heightened investment activities in the Ibeju-Lekki-Epe real estate market because of growing industrial activities. Ibeju-Lekki and its environs have seen enormous growth evident in the increasing commercialisation and launch of more residential developments, including estates within the area. With the influx of people seeking employment opportunities, the demand for residential properties has skyrocketed and real estate developers have responded appropriately.

The looming infrastructural upgrades particularly roads reconstruction leading to the refinery along the Ibeju-Lekki and Epe corridors thereby setting the ground for the proposed 4th Mainland Bridge to decongest the Lekki-Epe Expressway further, are attracting companies to establish offices, shopping malls and commercial hubs.

Upon full operations of the refinery, coupled with the expected movement of heavy-duty trucks and tankers along the roads leading to the refinery, a boom in the rental market is likely along the corridor as more residential developers and investors launch or complete their offerings to meet the effective demand. So far, the price of land in the Lekki environs reportedly has an average growth rate of 56% in the past five years, as a result of the ongoing infrastructure projects. That rise is expected to continue, barring any unseen events.

The refinery has capacity to provide loading facilities that could accommodate about 2,900 tankers and spur the building of housing units capable of accommodating 33,000 people. The refinery’s jetty which is expected to carter for the movement of heavy equipment to the refinery site, will greatly reduce the congestion at Apapa port and also help to cut down traffic on the Apapa road.

The downsides: burden on the road, pollution

Despite the huge potential of the Dangote Refinery to impact positively on the immediate and larger Nigerian economy, there are also some negative implications to be considered.

While infrastructure projects have positive implications, their impact can be negative if sufficient preparation has not gone into making the environment ideal to host them.

This is the case for the refinery, as the roads leading up to the Ibeju-Lekki-Epe axis such as the Ibeju-Lekki-Epe expressway are under construction. This has the potential to cause traffic congestion around the area and hindering free movement of motorists.

The refinery, coupled with the operations of the Lekki deep seaport, will require the heavy utilization of the roads by tankers, thus increasing the burden on the roads and worsening the state of traffic within the axis.

Proper road construction and maintenance or the introduction of bridges and flyovers will be required to avoid the presence of potholes and gridlocks and diversify viable route options.

While the refinery will attract investment in commercial real estate in that area, the presence of fumes and soot from the refinery will make the area less than appealing for residential developments.

Although the Lekki Free Trade Zone has been designed so the refinery is far removed from the residential cluster, the volume of the fumes and direction of travel cannot be predicted. In addition, the noise generated by the machines and safety concerns could further impact the take-up of residential developments within the area.