Dangote to boost Nigeria oil production
Billionaire business tycoon and Africa richest man, Aliko Dangote has revealed plans to build an $8 billion refinery with a capacity of around 400,000 barrels a day by late 2016; almost double Nigeria’s current refining capacity. Nigeria is Africa’s largest oil producing country with production standing at about 445,000 barrels per day among four refineries. However, none of these four refineries operate at full capacity owing to decades of mismanagement and corruption.
As a result of this, the country relies on subsidized imports for 80 percent of its fuel needs.
Although details of the site and capacity of the refinery are yet to be known; the plan to establish a new refinery which will kick start this year will be a landmark in the Nigeria downstream sector.
“This will really help not only Nigeria but sub-Saharan Africa. There has not been a new refinery for a long time in sub-Saharan Africa,” Dangote had told Reuters in a telephone interview.
He added that: “In five years, when our (Nigeria’s) population is over 200 million, we won’t have the infrastructure to receive the amount of fuel we use. It has to be done.”
Dangote however said his company is still awaiting final approval from the federal government. Once that is achieved, work will start on the refinery.
In 2011, the federal government of Nigeria granted approval to 19 multinationals to set up private refineries in the country but none of them has come on stream due to the regulation of the price of fuel in the country.
“We are all aware that the federal government had issued 19 licences to the private sector to establish refineries in the country, but how many of them have come on stream? There is uncertainty in the sector and only a mad businessman will put up a refinery now, but we are set to do that,” he said.
A surge in domestic capacity would be welcomed by investors in Nigeria, but it would cut into profits made by European refiners and oil traders who would lose part of that lucrative market, the news agency said.
Dangote however expressed concern on interference by vested interests such as fuel importers profiting from the status quo
“The people who were supposed to invest in refineries, who understand the market, are benefiting from there being no refineries because of the fuel import business. Some … are going to try to … interfere,” the business mogul said.
He however appeals to the government to allow market forces to determine the price of fuel to allow the private sector play a significant role in the industry. He also advised the government to put in place critical infrastructure in all sectors of the economy to kick-start its rapid development.