Key questions this article answers:
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The Dangote refinery will be commissioned today, the 22nd of May. What gains do businesses in the downstream sector expect?
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The refinery will also provide employment opportunities and reduce forex demand. How will this impact other sectors and the broader economy?
It’s only taken ten-plus years, but President Buhari will finally commission the $20 billion Dangote refinery today—saving the best for his last task as president.
Before we get too excited, this doesn’t mean the refinery will begin full operations today. Still, it’s exciting because the Dangote refinery is arguably Nigeria's singular most anticipated infrastructure project for many reasons, the most significant of which are encapsulated in the project name.
First, Dangote’s name is synonymous with business success in Nigeria, particularly because of the range of government incentives his companies continue to enjoy. Second, it’s a refinery. Nigeria’s relative oil-producing success hasn’t translated to converting the raw material (crude oil) to finished products (petrol, diesel, petrochemicals, etc.) that Nigerians can actually use.
The Dangote refinery’s capacity is 650,000 barrels per day (bpd), Africa’s single largest refinery. The refinery will convert 650,000 oil barrels daily to finished products at full capacity. In comparison, Nigeria’s total (mostly defunct) refining capacity is roughly 445,000 bpd, as shown in the chart below.
It’s still unclear whether the Dangote refinery will prioritise the Nigerian market to meet the country’s total demand or how much will be exported to earn foreign currency to service loans.
