Dangote Refinery key to solving Nigeria’s FX crisis, economic instability – S&P 

Business a.m.

An evaluation by S&P Global has suggested that Dangote Oil Refinery and Petrochemicals Company, with its potential to refine up to 650,000 barrels per day, holds the key to the possible solution of Nigeria’s long-standing foreign exchange challenges and the immense pressure on the local currency. 

The Manhattan-based international financial analytics corporation, S&P Global, revealed its optimistic projections for the refinery’s capacity to address Nigeria’s foreign exchange issues and currency pressures during an onsite visit to the Dangote Refinery at Ibeju-Lekki, Lagos, as part of its comprehensive assessment of Nigeria’s sovereign credit rating.

According to S&P Global, Dangote Refinery, considered the world’s largest single-train refinery complex, is not just a game-changer for Nigeria’s oil sector but also a potential catalyst for the nation’s economic growth. The corporation highlighted the refinery’s ability to have a positive impact on Nigeria’s economy, with particular emphasis on the oil sector, while also acknowledging the refinery’s role in strengthening the nation’s overall economic performance. 

Ravi Bhatia, director and lead analyst, sovereign and international public finance ratings, S&P Global Ratings, who led the delegation to Dangote Refinery in Lagos, stated that the refinery’s capacity to convert Nigeria into a net exporter of petroleum products would result in an uptick in revenue generation and a significant relief from the pressure on the country’s foreign exchange reserves.

“It is a very impressive facility, able to process 650,000 barrels a day, when in full capacity. It is the largest single-train refinery complex in the world. It came out quite quickly.

“Nigeria is a big exporter of crude but has issues with importing refined fuels. So, there is a gap in the market where crude can be refined in Nigeria, save money that way, and potentially save some foreign exchange. This will be positive for the economy in the medium term. It looks positive from our assessment,” Bhatia stated.

In a gesture of recognition for Dangote Industries Limited’s commitment to excellence, the visiting team from S&P Global Ratings commended Aliko Dangote, the company’s president, for adopting cutting-edge technologies and quality control measures, including a sophisticated central control unit to ensure smooth automated operations.

Other members of the team of the international ratings agency included Maxmillian McGraw, associate director, sovereign ratings; Omegu Collocott, director, corporate ratings; Charlotte Masvongo, senior analyst, bank ratings, and  Samira Mensah, director, financial services.

During a media interaction following the tour of the Dangote Refinery facility, Devakumar Edwin, the vice president of oil and gas at Dangote Industries Limited (DIL), reiterated the company’s commitment to leveraging Africa’s rich crude oil resources for local production of refined products. 

According to Edwin, this strategy is aimed at kickstarting a virtuous cycle of industrial development, employment creation, and economic prosperity. 

He also revealed that, as earlier promised, the company will start the production of premium motor spirit (PMS) in July.

The DIL VP also noted that the $20 billion facility is capable of satisfying the entire domestic demand for petrol, diesel, kerosene, and aviation jet fuel in Nigeria, with surplus quantities available for export to other countrie

Currently operating at 350,000 barrels per day capacity, Edwin said the refinery is slated to scale up to at least 500,000 barrels per day capacity by July/August, commencing the refining of petrol and ultra-low sulphur diesel. 

He noted further that the refinery, designed to process a wide range of crudes including various African and Middle Eastern crudes, as well as US Light Oil, conforms to Euro V specifications.

In addition, he said that it is designed to comply with US EPA, European Union (EU) emission norms, the Department of Petroleum Resources (DPR) emission/effluent norms, and the African Refiners and Distribution Association (ARDA) standards.

Highlighting the unique nature of the Dangote Refinery, Edwin remarked that unlike most refineries built by international companies, the $20 billion project is a testament to the capability and determination of a Nigerian company to design and build the world’s largest single-train refinery complex. He further noted that Dangote Industries Limited acted as its own engineering, procurement, and construction (EPC) contractor, adding to the pride and prestige of the project as a symbol of Nigeria’s industrial potential.