S&P Global: Dangote Refinery Can Solve Nigeria’s Forex Problems
…Refinery poised to catalyze economic development
The Dangote Refinery has announced that it will begin the availability of Premium Motor Spirit (PMS) starting this July. The international financial analytics corporation, S&P Global, has highlighted the 650,000 barrels per day (bpd) Dangote Oil Refinery and Petrochemicals company as a key solution to Nigeria’s foreign exchange (forex) challenges and its impact on the local Naira currency. Additionally, the refinery is expected to drive significant economic development in the country.
During an onsite visit to the Dangote Refinery in Ibeju-Lekki, Lagos, as part of its sovereign credit ratings assessment of Nigeria, S&P Global underscored the refinery’s potential. The visit included officials from the Federal Ministry of Finance, and the delegation from S&P Global noted the substantial benefits the refinery would bring to Nigeria’s oil sector and overall economy.
Ravi Bhatia, Director and Lead Analyst for Sovereign and International Public Finance Ratings at S&P Global Ratings, led the delegation. He emphasized that the Dangote refinery would enable Nigeria to become a net exporter of petroleum products, boosting revenue and easing the pressure on foreign exchange reserves.
“It is a very impressive facility, able to process 650,000 barrels a day at full capacity. It is the largest single-train refinery complex in the world. Nigeria, a major crude exporter, faces challenges importing refined fuels. Refining crude domestically can save money and foreign exchange, positively impacting the economy in the medium term,” Bhatia remarked after a four-hour tour of the facility.
Devakumar Edwin, Vice President of Oil and Gas at Dangote Industries Limited (DIL), reiterated the company’s commitment to harnessing Africa’s crude oil resources to produce refined products locally. He highlighted the potential for industrial development, job creation, and economic prosperity. Edwin also confirmed that the refinery would start producing PMS this month.
Edwin emphasized that the products from the $20 billion facility meet international standards, capable of fulfilling Nigeria’s entire demand for petrol, diesel, kerosene, and aviation jet fuel, with surpluses available for export.
The S&P Global team praised Aliko Dangote, President of Dangote Industries Limited, for integrating advanced technologies and quality control measures, including a state-of-the-art Central Control Unit for smooth automation of operations.
Other members of the S&P Global delegation included Associate Director of Sovereign Ratings, Maxmillian McGraw; Director of Corporate Ratings, Omegu Collocott; Senior Analyst of Bank Ratings, Charlotte Masvongo; and Director of Financial Services, Samira Mensah.
Currently operating at 350,000 barrels per day capacity, the refinery is set to scale up to at least 500,000 barrels per day by July/August, commencing the refining of petrol and ultra-low sulfur diesel. The refinery is designed to process a wide range of crude oils, including African and Middle Eastern varieties, as well as US Light Oil, and complies with Euro V specifications and various international emission standards.
Highlighting a point of national pride, Edwin noted that the refinery is designed, engineered, and constructed by a Nigerian company acting as its own Engineering, Procurement, and Construction (EPC) contractor. The facility also includes a self-sufficient marine unit capable of handling the world’s largest vessels.
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Nigeria, despite being a leading oil producer, exports all its crude oil for refining and imports refined products due to a lack of operational refineries. It is estimated that Nigeria imports at least 50 million liters of petrol daily to meet domestic demand. In 2023, Nigeria spent approximately N12 trillion on importing petroleum products, including PMS, reflecting an 18.68% increase from the N10 trillion spent in 2022, according to the National Bureau of Statistics (NBS).
