The long-awaited inauguration on Monday, May 22 – seven years late – of Nigeria’s first private crude oil refinery by Africa’s richest man, Aliko Dangote, is fulfilling an age-old dream for Nigerians. Indeed, it is indeed one of Nigeria’s biggest investments. More than an industrial infrastructure, the mega-refinery aims to fully meet the fuel needs of Africa’s most populous country and even export it to the continent. This ambitious project also promises to stimulate growth, while recent years have been marked by a serious deterioration in the economic situation in the most populous country in Africa (215 million inhabitants). Proof of state involvement, the plant is 20% owned by the Nigeria National Petroleum Co., the state oil company, which has in any case committed to supply 300,000 barrels of crude. And Nigerian President Muhammadu Buhari was, of course, front row at the inauguration at the Lekki Free Zone on the outskirts of Lagos.

Launched in 2013, the more than $18.5 billion industrial project (twice the original cost) is “the largest single-stage refinery in the world”, according to the Dangote Group, and should, at full capacity, have the largest crude refining capacity on the African continent.

Proof that the project is part of a more global strategy for the industrialization of the country, the industrial site was built next to the new deep-water port of Lekki, inaugurated in 2022, which should make it possible to relieve the port of Lagos, but also to to export some of Dangote’s refined oil to other African countries. “This complex has the capacity to process 650,000 barrels of crude per day, which will allow our country to achieve self-sufficiency in refined products, and even have reserves for export,” said the head of state, Buhari, a few days before the end of his second term. “This is an important milestone for our economy and a game changer for the oil sector, not only in Nigeria but across the continent,” he added to several CEOs. African States, and Nigerian officials, including Presidents Mohamed Bazoum (Niger), Macky Sall (Senegal), Nana Akufo-Addo (Ghana) and Faure Gnassingbé (Togo).

Nigeria’s new president-elect, Bola Ahmed Tinubu (ruling party candidate elected in February), who is due to take office next Monday, was not present. He was represented by his vice-president Kashim Shettima.

“Beyond today’s ceremony, our first objective is to accelerate the production of the various products to ensure that this year we will be able to fully meet the demands of our country,” said part announced, optimistic, Aliko Dangote, whose political influence in Abuja is undeniable.

Behold the spectacle that is Dangote Petroleum Refinery and Petrochemicals ��

The refinery, whose commissioning has been repeatedly postponed, is not expected to begin operations until June. Which would make it one of the most important industrial complexes on the continent, and could be a game-changer in Nigeria. Because if the country is one of the largest oil producers in Africa, it nevertheless imports almost all of its fuel, due to the failure of its state refineries.

Nigeria is trading its crude oil estimated at billions of dollars for imported fuel, which it then subsidizes, to keep an artificially low price in the market, creating a money pit. Thus, in 2020, the West African economic giant spent $7.78 billion to import refined petroleum products. The following year, the value of these imports even increased by 45% to $11.3 billion.

According to analysts, this system encourages corruption and prevents the state from investing massively in key sectors, such as health or education, while nearly half of Nigerians live in extreme poverty. Nigeria spent nearly $10 billion on fuel subsidies in 2022. A figure that represents about 24% of the 2022 budget and above all constitutes an unsustainable drag on public finances.

According to the Nigerian billionaire – who can be found in cement, fertilizers, agriculture –, eventually, “at least 40% of the refinery’s capacity will be available for export, which should lead to the country large inflows of foreign currency”. During his speech, he assured that the first petroleum products should be on the Nigerian market “before the end of July, beginning of August this year”.

However, if the planets seem aligned for the Dangote group, analysts doubt the advanced date for the commissioning of the refinery. Indeed, the facility needs a constant supply of crude, but Nigeria’s oil production has declined due to repeated oil thefts, pipeline vandalism and underinvestment. In recent years, the country has faced several fuel shortages, which have driven up transport and commodity prices. As for the recent fuel shortages, they have been blamed on the Russian-Ukrainian war, thus the price of imported fuel has increased by more than 100%. And importers have operated at a loss due to price caps set by the government.

“It is unlikely that the first products will be available in August, it will probably be at the end of the year,” Tunde Leye, of the Nigerian analysis group SBM intelligence, told AFP. “The refinery is expected to be running at full capacity only at the end of 2024,” he added, noting that the inauguration of the refinery was most likely brought forward for political reasons.

It comes in fact a week before the departure from power of President Buhari, who is stepping down after two terms marked by a serious deterioration in the economic situation (double-digit inflation, shortage of fuel, foreign currency, rampant poverty, etc.).

According to the analyst, the Dangote mega-refinery should allow Nigeria to end the frequent fuel shortages, but also to increase the quality of fuel in circulation. However, he doubts that it will immediately lower the price of fuel in Nigeria, “because Mr. Dangote has been forced to borrow massively”. “He’ll have to repay those loans quickly, so he’ll sell the oil at market price,” he said.

These are all challenges for the new plant, which should, when fully operational, create more than 250,000 direct and indirect jobs. The refinery will “end the currency drain” and “create massive jobs,” a senior Dangote conglomerate official, who did not wish to be named, told AFP. According to him, the project will “meet all the needs of Nigerians” and serve the needs of the whole world. “We have the ability to export the products to any part of the world. We have two ships to deliver the crude and three ships to export it to any part of the world,” he said.

Undersea pipelines 1,100 kilometers long have been laid to connect the oil-rich Niger Delta to the industrial complex. This sprawling complex also includes a $2 billion fertilizer plant with a capacity of 3 million tons per year.