Dangote Refinery Reaches 80% completion, to Start Selling Petrol Next Year

Dangote Group said it will start the sale of petroleum products from its refinery in the last quarter of 2021 as construction works at the facility have attained 80% completion.

Meanwhile, products from its $2 billion urea fertiliser plant, reputed to be the largest in the world and located close to the 650,000 barrels-per-day (bpd) refinery, are due to come on the market in December 2020.

“If you look at the overall percentage completion we are at 80 percent. But that overall includes engineering and design, which is 100 percent over. Procurement is about 98 percent over. So, it covers various aspects.” said Devkumar Edwin, executive director, strategy, capital projects, and portfolio development at Dangote Group in Lagos on Wednesday.

“So, now, we hope to complete everything – all the assembling by the middle of next year. Then, we will start the commissioning process. Middle of next year, we start the commissioning process, and it’s a huge refinery, the commissioning process may take three to four months.”

Edwin stated that the market forces of demand and supply would largely dictate gasoline pricing in the country once the refinery operations began but noted that as local refining capacity expanded, fuel price was bound to reduce with increasing supply across the market.

“You can see it in the refinery too. BUA too has announced that they are going to put up 200,000 barrels per day refinery. And you can see a lot of cottage refineries coming up – 5,000 barrels, 3,000 barrels. So as more capacity comes in, the philosophy of demand and supply will automatically act.

“Yes, it (petrol price) will not crash in one day but with a period of time it will come down to almost half the price currently.” 

BUA Group, whose cement-manufacturing unit is a rival to Dangote Cement in the contention for market share, with both companies among Nigeria’s five biggest companies by market capitalisation, inked a deal with France’s hydrocarbon group, Axens in September to develop a 200,000 bpd capacity refinery. 

Nigeria abolished its decades-old fuel subsidy regime in April 2020. There have been questions over if the Dangote Refinery would ship its refined petrol abroad to sell at market rates or be paid the difference between the market rate and the subsidised rate in Nigeria. 

The eradication of the subsidy has put paid to these speculations and will also attract more investment in refineries in Nigeria. Dangote has a capacity of 650,000 barrels of petroleum per day while Nigeria consumes between 500,000 to 550,000 bpd.