Dangote Refinery: More Hurdles to Cross

For Dangote Oil to kickstart crude oil operations as an indigenous oil producer is obviously facing an uphill task. The challenges have caused Mr Aliko Dangote to regret venturing into the sector he claimed is governed by a cabal. Recently, he lamented the mafia emasculated, saying had he listened to a friend’s advice he would have been saved of the troubles. This brings to the front burner the many rivers awiting him to cross to start full operations. Korede Abdullah writes

 

The highly-anticipated Dangote oil refinery, touted as a game-changer for Nigeria’s energy landscape, has hit a snag as the facility is yet to receive a full operational license, casting a shadow over its scheduled commencement of production.

The nation was jolted yesterday as the Chief Executive Officer of the Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA) told journalists that it has not licensed the Dangote refinery even as marketers are gearing up towards getting petrol products from it next month as the country is battling with fuel scarcity.

Despite being Africa’s largest oil refinery, with a capacity to process 650,000 barrels of crude oil per day, the delay in securing a full license has raised concerns about the country’s continued reliance on fuel imports and the potential economic implications of another delay in reducing its dependence on foreign oil.

Players in the oil sector have said that the development means that the refinery may not be able to start production as planned, leading to delays in meeting Nigeria’s fuel demands. This will definitely have an economic impact on the nation and its tottering economy as the refinery initially expected to reduce fuel imports and save foreign exchange.

Nigeria’s refining capacity has been grossly insufficient to meet domestic demand, leading to reliance on imports. The country’s refineries are old and have not been properly maintained, resulting in frequent breakdowns and reduced production.

Nigerians will have to bear the pain of continued fuel scarcity. The refinery is expected to increase local fuel production this month (July) as announced by the Vice President of Oil and Gas at Dangote Industries Limited (DIL), Devakumar Edwin. He had given the assurance that Dangote Refinery would commence the production of Premium Motor Spirit (PMS), also known as petrol, this month.

Since the CEO of NMDPRA has asserted that products coming out of the Dangote refinery were of low quality and inferior to import products. The implication is that the country will have to continue with the importation of the products, thereby further affecting Nigeria’s foreign exchange.

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