Alhaji Aliko Dangote, President of the Dangote Group, has announced plans to expand the storage capacity of his refinery by 600 million litres. This expansion will bring the refinery’s total storage capacity to 5.3 billion litres. Currently, the Dangote Petrochemical Refinery has a storage capacity of 4.78 billion litres for refined petroleum products.
Speaking at the Afreximbank Annual Meetings and AfriCaribbean Trade & Investment Forum in Nassau, The Bahamas, Dangote revealed that international oil companies had initially refused to sell crude oil to his refinery, as they did not want him to succeed.
When asked whether his refinery would reduce the pump price of petrol, which is currently around N700 per litre, Dangote did not provide a definitive answer. Instead, he recounted how the price of diesel fell significantly when his diesel entered the market. “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 said.
Dangote emphasized the strategic importance of his refinery, stating, “The country doesn’t have strategic reserves in terms of petrol, which is very dangerous. But in our plant now, when you came, we had only 4.78 billion litres of various tankage capacity. But right now we’re adding another 600 million. So effectively, as we go forward, the refinery will be the strategic reserve of the country in terms of petroleum products.”
Dangote also disclosed that international oil companies denied him access to crude oil because they doubted his ability to succeed with the 650,000 barrels per day capacity refinery. “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,” he said. “And I think that is the process that we’re now really going through. But the truth is that, yes, the country, the sub-region, and also the continent, of sub-Saharan Africa, need this refinery. So, you expect them to fight through non-supply of crude, non-purchase of the product, but I think it’s all temporary. We’ll get there.”
The refinery has been importing crude oil from the United States to meet its feedstock needs. Dangote pointed out that Nigeria has been importing dirty fuel for years, contributing to many cancer cases in the country and Africa. He urged the Federal Government to enforce regulations to stop the importation of dirty fuels. “It is high sulfur, very polluting and also when you look at it, especially in Nigeria, in the past few years, we’ve been having cases of cancer, and most of these cases of cancer have to do with the bad fuel that we’ve been using. So, I will advise even here, you should check the quality of what is being dumped in your region in The Caribbean,” Dangote stated.
On future prospects, Dangote said Nigeria would no longer import any fuel once he begins the sale of PMS in the coming weeks. He also revealed plans to supply cheaper fuel to the Caribbean, where fuel prices are high. “I don’t know the exact price but I know that the price in the Caribbean in terms of petroleum products is very high. So, we produce it cheaply, we can always bring it here, we can set up a terminal and we will be able to feed their needs. We have a bilateral agreement with them and bringing in stuff from there is not more than 18, 20 days maximum. Once we set up a terminal, they will have very cheap oil. They will have cheap energy. By having cheap energy, their economies will grow faster,” he said.
Dangote recounted how a former Minister of Energy in Saudi Arabia, Khalid Al-Falih, had advised him against building the refinery. “Four years ago, I was in Saudi Arabia during the fasting period and I was invited for the breaking of the fast, Dr. Falih, who used to be the Minister of Energy invited me to come and break the fast with him and I went there. He just said, ‘Aliko, I heard that you’re planning on building a refinery, what capacity?’ I said 650,000. He kept quiet for a while and said, ‘You know just about 120km from Mecca, we are building one and I think I would like you to go and have a look. We as Saudi Aramco, are facing a lot of challenges and, we are proceeding with it, but my advice to you is not to do it because normally, refineries are built by major oil corporations or sovereign countries.’ I said, ‘But Your Excellency, unfortunately, we have already started, so I’m not looking for any advice.’ That was really how we continued,” he recounted.
Dangote revealed that both local and international cartels, which he described as “mafia,” made repeated attempts to sabotage the $19 billion refinery project located in Lagos. “Well, I knew that there would be a fight. But I didn’t know that the mafia in oil, they are stronger than the mafia in drugs. I can tell you that. Yes, it’s a fact,” he said. Describing himself as a fighter, Dangote added that these groups tried all sorts of tactics to stop him. “As a matter of fact during the COVID period, some of the international banks were looking forward to making sure that they push us into default of our loans so that the project will just be dead. And that didn’t happen with the help of banks like Afreximbank,” he stated.
He explained that he had paid off $2.4 billion of the $5.5 billion loan for his $19 billion Lagos-based refinery. “We borrowed the money based on our balance sheet. I think we borrowed just over $5.5 billion. But we paid also a lot of interest as we went along, because the project was delayed because of a lack of land, also the sand-filling took a long time. Almost five years or so we didn’t do anything. We started in 2018. We borrowed that much. We have, of course, paid interest and some principal, about $2.4 billion. We’ve done very well. We now have only about $2.7 billion left to be paid. So we’ve done very well for a project of that magnitude,” he said.
