Dangote Refinery: A tribute to Nigerian banks

The commissioning of the Dangote Refinery by President Buhari on Monday, May 22, 2023, is one of the proudest moments for me and other patriotic Nigerians who had endured untold pain and indignity from decades of intractable fuel shortages. Apart from its huge contributions to the economy, this complex will finally take away our shame and underscore our resilience and determination as a people to fix our country.

Being the only OPEC member with a perennial problem of fuel shortages has embarrassed Nigeria and tortured its citizens for over 30 years. Many Nigerian motorists have different experiences about fuel shortage. Personally, I have spent a night at a petrol station in Maryland, Lagos in 1996, and almost got into a fight at another station in Victoria Island in December 2000. I recall that I listened to IBB’s step-aside speech on August 27, 1993, on my car radio at the Mobil station on Awolowo Road, Ikoyi. I had been queuing there all day.

Driving around with plastic containers in our cars, looking for fuel has been a major preoccupation of Nigerian motorists for as long as I can recall. International media mocked us too. A BBC correspondent once described the fuel queue in Lagos as ‘’the longest man-made vehicular line in the world’’.

But all these will soon vanish as the refinery begins production before the end of July and the nation eventually exits the excruciating fuel subsidy regime. My first instinct is to pay tribute to the Nigerian banks for standing up to lend their support to this very transformational project. I also congratulate Aliko Dangote for being our true hero.

The Dangote refinery complex includes a refinery, petrochemical plant, urea fertilizer plant and a subsea pipeline project. The petrochemical facility has a capacity to produce one million metric tonnes of polypropylene per annum; while the urea fertiliser plant, which had commenced production last year, can churn out three million metric tonnes of urea annually. The refinery, with the capacity to process 650,000 barrels of crude oil per day, is the largest single-train refinery in the world. It will therefore meet Nigeria’s domestic fuel consumption (about 450,000 barrels per day), thus leaving excess for export.

Aliko Dangote first announced plans to build the refinery in September 2013. It was then projected to cost about $9 billion, of which $3 billion was expected to come from equity investment from the Dangote Group and the balance financed through commercial loans. But due to many unexpected challenges that led to cost overruns, the project was eventually completed at $18.5 billion, of which 50% was equity investment and the other 50% sourced from debt finance. The commercial loan component of the cost of this project, according to CBN Governor Godwin Emefiele “was financed majorly by our domestic banks with the balance sourced from foreign banks”. In addition, the CBN also provided about N125 billion to cover domestic currency requirements for the venture. This is music to my ears.

The huge exposure of our banks to the Dangote Refinery, Africa’s largest industrial concern, underlines their increased capacity to undertake big-ticket funding since the 2005 consolidation. It also testifies to the important role our banks play in Africa’s economic development, and once again proves, as I noted in a recent piece, that it is only Africans that will develop Africa. Across the continent, Nigerian banks are present in over 12 other countries apart from Nigeria, providing funding for hundreds of businesses and households, and offering employment to thousands of Africans.

Our banks are leading the charge for an African renaissance, reconfirming our nation as the true powerhouse of the continent despite our domestic challenges. For the Dangote Refinery, I salute Access Bank; GT Bank; Zenith; UBA; Fidelity and Afriexim Bank for the $9 billion support to the Dangote Refinery, which many have termed as the real game-changer for our economy.

While Dangote particularly singled out Access Bank and Zenith Bank “for going the extra mile in supporting us in this unprecedented investment”, Governor Emefiele thanked the banks for providing “immense support and exceptional understanding, even when interest payments and principal payments had fallen due”. Dangote Group’s impressive credit habits should be noted. Of the $9 billion facility, it has already paid down to $2.7 billion, even before the refinery begins production.

Dangote’s ultimate goal is to make the country self-sufficient in petroleum products and export the excess to other African countries where there is a huge market. Of the 55 countries in Africa, 53 are dependent on imported products. That’s a huge opportunity for the refinery, especially given the creation of the African common market through the recently established AFCFTA (African Continental Free Trade Area).

You can now understand why five West African presidents attended the commissioning event: Ghana’s Nana Akufo-Addo; Togo’s Faure Gnassingbe; Senegal’s Macky Sall and Niger’s Mohammed Bazoum, together with a representative of Chad’s Mahamat Debby. This plant will serve their countries equally well. Products from the refinery include petrol, diesel, aviation fuel and other intermediate products that are vital raw materials in the production of plastics, food and beverages, packaging, construction and pharmaceuticals.

As a father to two young engineers, I am also interested in the job opportunities this project offers. Dangote said “the refinery and ancillary businesses will generate massive job opportunities, the downstream value chain will provide far more absorptive capacity for labour in hundreds of thousands”. In addition, it will save us billions in foreign exchange and shore up our reserves.

I congratulate Aliko Dangote on this marvellous accomplishment. For decades, Nigeria has been expecting the IOCs to build refineries in the country after Shell built the first one with a capacity for processing only 60,000 barrels of crude, in the 1960s. But the IOCs blatantly refused, citing such reasons as regulated pricing regime and saturated global refining capacity.

Nobody gave us a chance that we could ever build one for ourselves. Governor Emefiele spoke of how he would be greeted with sneers and derision from international partners whenever he mentioned the Dangote Refinery in his discussions on Nigeria’s economic outlook during his travels. Those people do not ever believe that Africans are capable of doing anything good, and that’s why it is a very proud moment that we’ve pulled this off.