…Buhari says with Dangote Refinery, Nigeria would have excess refined petroleum for export
… will generates $21billion, to employ over 100,000 youths
The Central Bank Governor, Godwin Emefiele, during the inauguration of the Dangote Refinery, told Nigerians that if fuel importation continues till 2027, the country’s bill would hit $ 30 billion per annum.
This is one of the economic benefits the country will reap when the plant goes into full-blast operations by the end of July/ first week of August this year.
Emefiele in his goodwill message said one of the expected benefits of the refinery was savings for the country in foreign exchange spending worth between $25 billion to $30 billion annually.
The CBN governor disclosed that Dangote Group had started repaying some of the commercial loans even before the inauguration of the facility, which, he noted, reflected the commercial capability of the group and its chairman.
“I am pleased to inform everyone today that following extensive repayments, outstanding debt has dropped appreciably from over $9 billion to $3 billion.
“I must at this juncture appreciate all the participating local Nigerian banks, who did not only partner with the project through effective financing but were keenly aware of the importance of the project for our nation. They provided immense support and exceptional understanding, even when interest payments and principal repayment had fallen due.”
He recalled that in September 2013, when Dangote announced his plans for the refinery, it was estimated to cost about $9 billion, of which $3 billion was projected as equity investment by the Dangote Group and the balance financed through commercial loans.
He explained that due to many other factors, the project was eventually completed with a total of $18.5 billion with funding distributed into 50 per cent equity investment and 50 per cent debt finance.
The CBN governor said, “This project avails Nigeria with significant savings both in terms of foreign exchange and in easing the fiscal burden on the federal government. Available data at the Central Bank of Nigeria as of 2014, shows that at least 30 per cent of the foreign exchange required to meet Nigeria’s import needs went into the importation of refined petroleum products.
“It is instructive to note that according to the balance of payments statistics, the cost, including freight, of petroleum products imports into Nigeria doubled over a five-year period from about $8.4 billion in 2017 to $16.2 billion, indicating an annual average of $11.1 billion, before rising further to $23.3 billion by end-2022.
“At this rate, the average annual cost of petroleum products imports to Nigeria could reach $30 billion by 2027 if we continued to rely on petroleum imports. These figures suggest that the refinery could engender foreign exchange savings, to the country of between $25 billion and $30 billion annually.”
He added that the impact of these savings would be directly reflected in Nigeria’s foreign exchange reserves by reducing the pressure on the balance of payment.
The CBN governor added, “This project will equally provide support to the fiscal operations of the government as it could help ease budget constraints of funding the petroleum subsidy and engender fiscal savings.
“Available data indicate that, over a five-year period, fuel subsidy in Nigeria rose more than nine-folds from about N154 billion in 2017 to over N1.43 trillion before another three-fold rise to N4.4 trillion by the end of 2022.
“A simple straight-line projection suggests that this figure could surpass N7 trillion within the next three years if we do not tackle it effectively.
“Thankfully, the Dangote Refinery and Petrochemicals could spare Nigeria about N5 to N7 trillion annually in fiscal expenditure of the federal government over the next five years.”
Emefiele pointed out that the project was one of the many efforts of the CBN to support Buhari’s drive to diversify the economy.
He said, “We have provided interventions in many critical segments of the real sector, a few of which I will now mention, with your permission. The CBN Real Sector Facility is implemented through two interventions, namely Real Sector Support Facility through Differentiated Cash Reserve Requirement (RSSF-DCRR) and Covid-19 Intervention for Manufacturing Sector. Under this facility, the CBN has released the sum of N2.56 trillion to 462 projects in agriculture, manufacturing, mining, and services sectors.
“In addition, the CBN has also supported other priority sectors and segments of the economy, with cumulative N3.60 trillion released to the manufacturing sector to support the domestic productive capacity of industries.
“The sum of N2.09 trillion has been disbursed to various projects in the agricultural sector, particularly through the Anchor Borrowers’ Programme, which has supported 4.56 million smallholder farmers cultivating over 5.96 million hectares of agricultural commodities across the country.
“The Bank has also supported infrastructural development with the sum of N2.28 trillion to bridge the nation’s infrastructure gap and improve access to energy for domestic production.”
President Muhammadu Buharid described the inauguration of the $18.5 billion project as historic, adding that, the modern refinery would enable Nigeria achieve self-sufficiency in refined products and even have surplus for export. He said he was optimistic President-elect Bola Tinubu would sustain the enhanced business environment that facilitated such a project.
Speaking further, Buhari described the refinery as a significant milestone for the Nigerian economy and a game changer for the downstream petroleum products market in the entire African continent.
According to him, “This mega industry we are commissioning today is a clear example of what can be achieved when entrepreneurs are encouraged and supported and when an enabling environment is created for investments and for businesses to thrive.
“I am confident that my successor, His Excellency, Asiwaju Bola Ahmed Tinubu, will sustain the improvement in our economic and business environment and strengthen the framework of our public private partnership policies to accelerate the pace of our economic growth and development.
“I am happy to leave our economy in very competent hands.”
The President said, Dangote’s feat in executing the 650,000 barrels per day refinery, and urged other entrepreneurs to emulate his example in driving economic growth and realising Nigeria’s economic potential. He stressed the need for African countries to come together, integrate their economies, eliminate trade barriers, and rally their populations to achieve Agenda 2063 for the continent’s prosperity.
Buhari stated, “I urge and encourage our other great entrepreneurs to emulate this iconic Nigerian industrialist and join the government in accelerating our growth in order to realise our country’s globally recognised economic potential.
“When I travel around Africa and meet and engage my brother Heads of State (and I am delighted some of their Excellences are here) I often sense a quiet expectation that our country is blessed with resources and human capacity to lead Africa’s rise to economic prosperity and the attainment of Agenda 2063 – ‘The Africa we all want.’
“But to achieve the goals of Agenda 2063, Africa must come together – we must integrate our economies, eliminate barriers to trade and energise our youthful population to scale up our productive capacity.
“We must create necessary conditions for our private sector to grow and partner with the public sector to accelerate economic growth across the continent.
“We must not allow outside powers to use some of our leaders to destabilise our economic and political trajectory.”
Buhari acknowledged the visionary investments made by the Dangote Group, under the leadership of Dangote, in transforming Nigeria’s economy through its involvement in critical industries, such as cement and fertiliser. He noted that investment in these sectors had played a crucial role in shifting Nigeria from heavy import dependence to becoming a net exporter.
The president acknowledged that Nigeria’s economy had faced significant challenges over the years, including deficits in economic infrastructure, insurgency, and external crises, such as the global financial crisis, oil price collapses, the COVID-19 pandemic, and the Russia-Ukraine war.
Buhari stated, “The consequence of these challenges constitute a severe strain on our economy, limiting government’s ability to provide basic infrastructure without resorting to huge borrowings.
“Our government, therefore, took the decision to focus attention on creating an enabling environment for the private sector to thrive and fill the enormous gap in investments, not only in infrastructure, but also in all critical sectors.
“We recognise that without the active participation of the private sector and a strong commitment to public-private partnership, our economy would continue to remain severely challenged and our economic growth impeded.
“Government, therefore, will and should continue to provide an enabling environment and encourage innovative public private partnerships in all sectors of our economy.”
Buhari emphasised his administration’s commitment to the public private partnership approach, citing the Executive Order 007 of 2019, which facilitated the rehabilitation/construction of many roads by private sector investors using the tax-credit scheme.
According to him, “It is my hope that the succeeding administration will continue to apply such innovative schemes in partnership with the private sector to accelerate the provision of critical infrastructure, in particular roads, power and gas pipelines.”
Earlier in his welcome speech, Dangote emphasised the refinery’s role in fulfilling the group’s corporate vision of promoting self-sufficiency and global competitiveness. He stressed that the refinery was immensely supported by the CBN, under the leadership of Emefiele.
Dangote stated, “As in most mega projects, financing has been a source of many significant challenges. Governor Emefiele’s belief in and commitment to this project has been awesome.
“Without Governor Emefiele’s courageous support and backing, this project would not have stood a chance of successful completion. Governor Emefiele moved mountains to ensure the success of this project.
“Indeed, apart from the top management of the refinery itself, no one in this gathering has visited this site more times than Governor Emefiele. We are, indeed, very grateful.”
Dangote said, “We have built a refinery with a capacity to process 650,000 barrels per day (plus 900,000 tonnes of polypropylene) in a single train – which is the largest in the world. We have selected the best plants and equipment and the latest technologies from across the world.
“Our products slate is designed to meet the highest quality standards and high-value products, including Premium Motor Spirit (PMS), Automotive Gas Oil (Diesel), Aviation Turbine Kerosine (ATK); all of Euro V Standards that will enable us not only meet our country’s demand but also to become a key player in the African and global markets.
“Our coastal location and offshore loading and offloading (SPM) facilities with a capacity to receive all our crude oil supplies and evacuate up to 75 per cent of our liquid products give us direct access to the rest of Africa and the global market for exports. In addition, 80 per cent of our production can be discharged through trucks nationwide.”
Dangote disclosed that the huge investment of over $18.5 billion in the industry was prompted by the company’s desire to support and contribute its quota to the federal government’s sustained effort to transform the economy and reposition Nigeria as the leading nation in Africa, and a respected member of the world’s emerging economies.
According to him, apart from ensuring consistent supply of high-quality fuel for the transportation sector, the refinery would provide essential raw materials to a wide range of manufacturing sectors, including plastics, pharmaceuticals, food and beverages, and packaging, construction.
Dangote further stated that the refinery’s operation and related businesses would generate a substantial number of job opportunities, while the downstream supply and distribution of its products would significantly contribute to the absorption of labour, potentially benefiting hundreds of thousands of individuals.
He stated, “Once our plant is fully on stream, we expect that at least 40 per cent of the capacity will be available for export and this will result in significant foreign exchange inflows into the country.
“Overall, we are committed to operating our plant in line with international best practice requirements, recognising the importance of protecting the environment, and putting in place stringent environmental, health and safety policies to ensure that the refinery operates in a safe and sustainable manner.”
Dangote maintained that the inauguration ceremony was just the beginning of a great journey, a milestone in a new and exciting trajectory for the downstream sector of Nigeria’s oil and gas industry.
He said the group was firmly committed to replicating in the downstream oil sector what they had achieved in the cement and fertiliser markets, where Nigeria transited from being the largest importer of these products to a net exporter.
Beyond today’s ceremony, he noted that the first goal of the Dangote Group was to ramp up production of the various products to ensure, “Within this year, we are able to fully satisfy our nation’s demand for high quality products to enable us eliminate the tragedy of import dependency and stop, once and for all, the dumping in our market of toxic sub-standard petroleum products.”
He added, “Beyond this, we intend to ensure that our plants are run at the highest capacity utilisation and highest efficiency to enable us to export competitively to other markets, especially in the ECOWAS and the wider Africa region in which 53 countries out of 55 are dependent on imports to meet their petroleum products demand.
“This is a clear opportunity for Nigeria given the African Union’s commitment to the creation of an African Common Market through the recently established African Continental Free Trade Area (AFCFTA) regime.
“Let me now briefly touch on the immediate benefits today’s commissioning will bring to our economy and our people.
“First, beyond the constant availability of high-quality fuels for our transportation sector, the refinery will also make available to our Industries, vital raw materials for a wide range of manufacturers in the plastics, pharmaceutical, food and beverages, packaging, construction, and many other industries.
“Second, while the refinery operation and ancillary businesses will generate massive job opportunities, the downstream value chain will equally provide far more absorptive capacity for labour in hundreds of thousands.
“Third, once our plant is fully on-stream, we expect that at least 40 per cent of the capacity will be available for export and this will result in significant foreign exchange inflows into the country.”
Dangote commended Lagos State Government under the leadership of Sanwo-Olu for providing an enabling environment for private sector growth, particularly, the Dangote Refinery.
He said, “Lagos State Government has been exceptionally remarkable in their efforts toward the completion of this project.
“The Lagos State Government under the leadership of Governor Babajide Sanwo-Olu has provided an enabling environment for private sector growth in the state and this project. It has allowed us to invest over $30 billion in different sectors of the industry.”
infrastructure gap and improve access to energy for domestic production.”
Mele Kyari,group chief executive of the Nigerian National Petroleum Company Limited said the Dangote Refinery, with the new deal the company and NNPC had been building, supported by the enabling Petroleum Industry Act (PIA), would surely provide domestic security of supply.
He said, “The lingering challenges of petroleum subsidies is clearly getting out of the capacity of the state to bear and the differentials that domestic refining will provide is insignificant and cannot compensate for the subsidies.”
Kyari added that NNPC would continue to support investment in domestic refining to satisfy the growing demand for refined petroleum products in both local and regional markets as against simply exporting unprocessed crude to diminishing markets.
Lagos State Governor, Mr. Babajide Sanwo-Olu, in his remarks, said Buhari, Tinubu, and Dangote were a testament to the prosperity that could be achieved when leaders share a common vision for the people they lead.
Sanwo-Olu said the story of Buhari, Tinubu, and Dangote was a testimony that prosperity could be achieved when leaders have shared vision for the people they lead.
Sanwo-Olu shared three different stories on how Tinubu and Dangote were connected to the newly commissioned first privately owned refinery in Nigeria, saying the three leaders have shown Nigerians that leadership is about consistency and commitment to economic growth.
The governor said, “The vision of Aliko Dangote, President Muhammadu Buhari, and incoming President, Asiwaju Bola Ahmed Tinubu, is a story of possibility when men have a shared common vision, purpose and they have the possibility that things can happen, things can change and things can be prosperous for the people they are leading.
“These three men: Aliko Dangote, President Muhammadu Buhari, and President-elect Bola Ahmed Tinubu, epitomise all the great qualities of great leadership. They have shown us that nothing can be something. They have shown us that leadership is about consistency. It is about showing that whatever it is that you believe in, give it all it takes and at the end of it you will see the results coming out.”
Sanwo-Olu, while commending Dangote, said the business mogul was a completely detribalised Nigerian who had impacted many lives positively.
He said, “To our son, Alhaji Aliko Dangote, we are, indeed, truly proud that you have put Nigeria and, indeed, Africa on that world map in which you have done the very first. We are proud of your belief in your country and your belief in the youth that you are giving the opportunity to. We are proud of the fact that you are a Nigerian that is completely detribalised and you have imbibed it in many ways.
“It is about the opportunity this (refinery) has provided for all the youth and young people of our country. It is about the fact we can say to them the work these three men – Mr. President, Alhaji Dangote, and our incoming president have done and will continue to do.
“It is about our future. It is about providing an opportunity for the youth because over 150,000 direct and indirect jobs that will be created are for our youths; young leaders that are in their 20s and their 30s for them to believe that, indeed, Nigerian is a place for them. Nigeria considers them as an important and veritable tool in developing and ensuring the very best.
“I want to also thank our president-elect, who propelled a vision of what we are enjoying today. As governor and as Lagosian, he was the main architect of the modern history of the trajectory of Lagos and we are hopeful and praying that when he comes in as president, all of those additional vision that he has will come to reality.”
Sanwo-Olu, who was part of the birth of the Lekki Free Zone in 2006 during the tenure of Tinubu as governor of Lagos State, praised the host community for showing hospitality to investors in the area.
The governor stated, “I want to use this opportunity to thank our host community. This community has been the host to several firsts in our country and I want to thank all of them; from the traditional rulers, to all of the indigenous citizens that have continued to reflect the true spirit of Lagos to be able to show hospitality and accommodation in everything that we are about.”
Sanwo-Olu also commended Buhari’s eight years in office, saying the people of Lagos State are proud of what the president has done for Nigeria.
He said, “You (President) have spent 2,915 days out of 2,922 days that you have. Mr. President, you have spent 99.98 per cent of your time. Mr President, history will certainly judge you well. We in Lagos are happy. This is your third trip to the Lekki Free Zone in less than a year.
“We are proud of you. We are, indeed, excited that you have thrown everything you have into it and as you bow down, I might not have the opportunity of holding a microphone again, I want to say to you, that on behalf of Lagos State, we are truly proud of the things that you have done for us in this country.”
Presidents of African countries at the event included Macky Sall of Senegal, Nana Akufo Ado of Ghana, Faure Gnassingbe of Togo, and Mohamed Bazoum of Niger, and a representative of the Chadian president.