Can Dangote end fuel scarcity in Nigeria?

As the major victims of recurrent fuel crises in the country, Nigerians cannot fully ascertain whether or not Dangote is the messiah they have been waiting for. The Dangote Group, which recently won the Africa CEO Forum Award for Company of the Year, has released a statement saying by the time it has finished constructing its 250,000 hectares and $14 billion refinery, the country will say goodbye to endless queues for fuel, diesel and kerosene. The company, through its representative, has assured Nigerians that when its refinery commences operation, it will put an end to the recurring fuel crisis in the country.

The proposed Dangote Refinery, which will be based in the Lekki Free Trade zone for Lagos State, is turning out to be a project quite a lot of Nigerians anticipate, including the government and banking institutions as it is meant to aid self-reliance in processing crude oil into finished products within the confines of the country. In January 2016, the Dangote Refinery, which is projected to refine 650,000 barrels of crude oil per day, received a pledge of support from the Central Bank of Nigeria (CBN) stating that it will help the company access foreign exchange so as to aid in its construction.

In the wake of the state petroleum minister, Dr. Ibe Kachikwu, being summoned by the Senate, Mansur Ahmed, the Executive Director of Stakeholder Management and Corporate Communications, implied that once the refinery is completed, the country will no longer experience fuel crises. That refinery is the largest single refinery plant anywhere in the world. In addition to the plant, we are also going to produce other petrochemical products from the same complex. These are polyethylene and polypropylene,” he said.

Presently, Nigeria doesn’t seem to recover from one fuel crisis before another one rears its ugly head and, according to Kachikwu, this is largely caused by pipeline vandalism, which occurs incessantly around oil producing areas in the country. Although he proposed April 7 as the day that fuel queues will disappear from fuel stations around the country, whether or not this is a viable projection is yet to be determined. However, it appears vandalism is not the only factor contributing to fuel crisis, according to what Kachikwu told the Nigerian Senate, fuel marketers do not pump fuel because they can no longer raise letters of credit from banks to that effect.

What will Dangote do differently?

With these and many other factors causing the recurrent fuel crisis in the country, how will the Dangote Refinery improve the existing narrative? Ahmed told newsmen that the time has come for the country to deregulate downstream production, so everyone can benefit, not just a few. “It is time Nigeria completely deregulated the downstream industry. If they said it is done because of the common man, when you do the study, you do not see the ordinary people benefiting from it, it is a few people who benefit. This is the best time to deregulate,” he said.

According to a report from the Nigerian National Petroleum Corporation (NNPC) in January 2016, the Kaduna, Port Harcourt and Warri refineries produce over 6.76 million liters of petrol per day. These refineries, at the time, had a total output of 445,000 barrels per day. If the Dangote Refinery begins refining petroleum products, the country will be able to improve on producing refined products. Together these Nigerian based refineries will produce 1,095,000 barrels per day, just 145,000 short of what the world’s largest refinery, India’s Jamnagar Refinery produces per day. So, Dangote Refinery can definitely effect a change in Nigeria’s petroleum sector.

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