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Nigeria’s Dangote still expects refinery to be running early 2021

The Dangote oil and gas refinery remains on track to be operational in early 2021 despite the disruption caused by the COVID-19 pandemic, group executive director Devakumar Edwin tells the Africa Report.

The impact of the delay will be “45 days max” as complete closure, which would have meant a delay of up to 90 days, has been avoided, said Edwin.  There have been some staffing reductions because of the need for social distancing, but work has been continuing. Almost everything needed to complete the project has already been procured, he said.

Aliko Dangote’s refinery has been labelled as the solution to Nigeria’s oil import problem. The country currently lacks the refining capacity to meet local demand, and instead imports refined petroleum, placing a burden on the foreign reserves. Dangote’s oil and gas refinery is expected to produce enough to meet local demand plus a surplus for export.

Initially expected to begin production in 2016, the refinery deadline was postponed to the end of 2019 after a change of location. Nigeria’s inefficient ports in Lagos have been blamed for the slow progress of what will be Africa’s largest refinery with executives citing problems in the importation of steel. Reuters reported in August 2019 that industry insiders don’t expect fuel output before 2022.

Edwin says that the refinery will comply with emission rules, allowing oil to be readily sold in Europe and North America, as well as to all parts of Nigeria.

  • “Most of the refineries are tuned to produce their products to their immediate export markets and not the global markets,” he said.
  • “My focus is to sell it in any part of the world. I am ready for all the markets. The volume is so large obviously I can meet the requirements of all the products of Nigeria and I’ll still have surplus to export.”

Environmental concerns

Dangote is not seeking to participate in the crude-for-fuel swap deal managed by state oil company Nigerian National Petroleum Corp (NNPC), Edwin said.

“If there are already people who are in the business it doesn’t make any sense to go and displace and ruin their business. We will produce and we will sell our products to these importers and they will deal with their own arrangements, and if anybody wants to buy from us we can also support them,” Edwin said.

Environmentalists fear the impact of completion of the refinery, which sits on the Lekki Lagoon.

  • According to local fishermen, the dredging of the coast to sand-fill the lagoon for the construction of the refinery has depleted local fishing stocks.
  • Historically, Nigeria has failed to deal with oil spills properly. Years after the Ogoni oil spills, the cleanup is not yet underway.
  • Edwin says that the Dangote refinery meets global environmental standards.

The Niger Delta has in recent years become a target for protests by groups upset by the environmental impact of oil companies, which have disrupted business.  Edwin says it’s in Dangote’s interests to stop problems before they start.

  • Given the amount being invested, “even for one day of disruption the cost is phenomenal,” he says.
  • “It’s worth trying to think ahead of it and invest in those areas” to prevent disruption from happening.

Bottom line: The environmental impact of the refinery will be an even more complex challenge for Dangote than COVID-19.