Dangote Refinery: Options Before Tinubu As Buhari Shifts Decision

A major decision on Dangote Refinery appears to have been shifted by President Muhammadu Buhari for his successor Asiwaju Bola Ahmed Tinubu to handle.

Tinubu, the President-Elect will be sworn in as the new President of Nigeria on May 29, 2023.

There are strong indications that among the issues he needs to immediately tackle headlong is that of Dangote Refinery, the project expected to cater to domestic use of fuel with spillover for export as the government seeks to free funds for more vital use with the removal of fuel subsidy.

The Refinery which has been afflicted with delays attributed to varying factors, particularly funding wants additional government support to meet the new deadline of 2025.

Announced in 2013 with an initial completion date of 2018 and a $3.3bn loan arrangement with local and foreign banks to fund the construction, Dangote Refinery, (with Africa’s richest man, Aliko Dangote as the chief promoter ) is yet to near completion even after the Federal Government – through a loan from one of NNPC’s international bankers – made a payment of $1.038billion in two tranches of $519.5million in as part of a $2.76billion in cash-and-crude to the Dangote Group to fund the construction of the refinery in return for 20% equity in 2021.

The agreement is that the balance of 1.72billion dollars will be paid after the completion of the project in 2022.

But faced with the lingering need for funds to meet a new deadline of 2024 ( some say 2025 looks the most feasible ) and – unable to get from other sources -, the promoters of the Refinery pushed for payment from the government ahead of time.

President Buhari has reportedly left the decision for his successor to make, along with talks of a new deal.

The incoming President is reportedly being lobbied to pay the 1.72billion dollars and commit to a new deal of 3billion dollars and crude for additional 20% equity to see the refinery through.

This development has resulted in the throwing up of other options by those who feel otherwise in the face of calls for due diligence.

Among the options being thrown up is the need to encourage the use of Modular Refineries, the simplified refinery requiring significantly less capital investment than traditional full-scale refinery facilities.

Another is to pay more attention to the restoration of the government-owned refineries that is already underway for a more feasible short-term solution that will serve as a more reliable bridge for the changeover from imported petroleum products.

Also included is a strong consideration of investing in renewable energy sources with long-term benefits to the nation’s economy and environment while keeping an eye on mothering self-sufficiency in fuel production.

The advocates of these options believe that the nation is “debt-stressed” on the Dangote Refinery project and insist on in-depth due diligence before any further consideration on the project against the background of the multiple shifts in the date of completion.