Nigerian billionaire and CEO of Dangote Refinery, Aliko Dangote, has revealed that the $20 billion refinery was built without any direct incentives from the Nigerian government. However, Dangote emphasized the need for the government to offer incentives to future investors in order to establish Nigeria as a key refining hub on the African continent. His remarks, delivered by Mansur Ahmed, Group Executive Director of Dangote Industries, came at the inaugural Crude Oil Refiners Association Summit themed “Making Nigeria a Net Exporter of Petroleum Products.”
Despite not receiving government incentives during its development, Dangote sees the refinery as a catalyst for transforming Nigeria’s energy landscape. He stressed that government support is essential for attracting more investments into refining, a sector critical for Nigeria’s self-sufficiency in petroleum products. “We built the Dangote Refinery without a single incentive from the government. However, to achieve the vision of turning Nigeria into a refining hub, investors need to be incentivised,” Dangote stated.
A crucial policy for the sector, according to Dangote, is the implementation of the Domestic Crude Supply Obligation, which is embedded in Nigeria’s Petroleum Industry Act (PIA) of 2021. This policy is designed to ensure that local refineries have a steady supply of crude oil, a necessity for maximizing the country’s refining capacity. “We will also need to prioritize the implementation of the domestic crude supply obligations,” Dangote urged, adding that the expansion of Nigeria’s crude oil production capacity is key to meeting the growing demand from newly established refineries.
Dangote also pointed out the paradox of African countries, like Nigeria, depleting future oil revenues to meet current needs. In contrast, countries such as Norway have created sovereign wealth funds to save oil proceeds for future generations. For Nigeria to truly benefit from its resources, Dangote argued, there must be a concerted effort to build refining capacity that matches the country’s crude oil output. “We will need to expand our crude oil production capacity to support demand from new refining capacity,” he said, projecting a target of 1.5 million barrels per day for refining capacity—an ambitious goal that will require strong government backing.
He praised the administration of President Bola Tinubu for taking steps toward achieving this goal by fast-tracking international oil companies’ (IOC) divestments and implementing other energy sector initiatives aimed at strengthening the nation’s refining capabilities.
Currently, the Nigerian National Petroleum Company Limited (NNPC) has an agreement to supply crude oil in naira to the Dangote Refinery for an initial period of six months. This arrangement, part of a broader strategy to increase domestic refinery supply, is seen as a temporary solution, as crude oil is typically priced in dollars on the international market. The agreement is under review by the Technical Sub-Committee on Domestic Sales of Crude Oil in Local Currency.
Dangote underscored the importance of transforming Nigeria into a vibrant exporter of refined products, a move that he believes will significantly boost the nation’s balance of trade and generate much-needed foreign currency. “As a vibrant exporter of refined products, Nigeria will witness an improvement in its balance of trade and generate the much-needed foreign currency,” he said, adding that the country’s potential as a refining hub is clear.
He also noted that the Dangote Refinery is already producing sufficient diesel and jet fuel to meet domestic demand. As part of this expansion, the Nigerian government recently approved the refinery as the exclusive supplier of jet fuel to local airline operators, a major step toward ensuring energy security for Nigeria’s aviation sector.
Dangote concluded on an optimistic note, affirming that just as his company helped Nigeria achieve self-sufficiency in cement production, the same could be done for petroleum products. “Nigeria and Africa can become completely self-sufficient. We have done it in Cement, and we can certainly do it for petroleum products,” he said.
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