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Dangote Refinery capable of solving Nigeria’s FX crisis, says S&P Global

Dangote Refinery

S&P Global has described the 650,000 barrels per day (bpd) Dangote Oil Refinery and Petrochemicals Company as capable of resolving Nigeria’s foreign exchange (FX) challenges and huge pressure on the local currency.

The international rating agency during an onsite visit to the Dangote Refinery at Ibeju-Lekki, Lagos as part of its sovereign credit ratings assessment of Nigeria, also said it can catalyse the country’s economic development. 

The team included the Director and Lead Analyst, Sovereign and International Public Finance Ratings, S&P Ravi Bhatia; Associate Director, Sovereign Ratings, Maxmillian McGraw; Director, Corporate Ratings, Omegu Collocott; Senior Analyst, Bank Ratings, Charlotte Masvongo; and Director, Financial Services, Samira Mensah. 

The S&P team was accompanied by officials from the Federal Ministry of Finance, according to the company’s statement yesterday.

Director and Lead Analyst, Sovereign and International Public Finance Ratings, S&P Global Ratings, Ravi Bhatia, said

Was quoted as saying: “It is a very impressive facility, able to process 650,000 barrels a day, when in full capacity. It is the largest single-train refinery complex in the world. It came out quite quickly.

“Nigeria is a big exporter of crude but has issues with importing refined fuels. So, there is a gap in the market where crude can be refined in Nigeria, save money that way, and potentially save some foreign exchange.

“This will be positive for the economy in the medium term. It looks positive from our assessment.”

The team also commended the President, Dangote Industries Limited (DIL), Aliko Dangote, for integrating advanced technologies and quality control measures, including a state-of-the-art Central Control Unit ensuring smooth automation of operations. 

Nigeria is a big exporter of crude but has issues with importing refined fuels. So, there is a gap in the market where crude can be refined in Nigeria, save money that way, and potentially save some foreign exchange.

Also, Vice President, DIL, Devakumar Edwin, who led the tour, reiterated that by harnessing Africa’s abundant crude oil resources to produce refined products locally, the company aims to catalyse a virtuous cycle of industrial development, job creation, and economic prosperity. 

He also confirmed that, as earlier promised, the Refinery will commence the production of premium motor spirit (PMS), this July. 

Noting that products from the $20 billion facility are of high quality and meet international standards, Mr. Edwin said it can meet 100% of Nigeria’s demand for petrol, diesel, kerosene, and aviation Jet, with surpluses available for export. 

Currently operating at 350,000bpd, Mr. Edwin said the refinery is slated to scale up to about 500,000bpd capacity by July/August, with the production of petrol and ultra-low sulphur diesel. 

Nigeria, one of the world’s leading oil-producing countries, exports all its crude oil and subsequently imports refined products due to a lack of operational refineries.

It is estimated that Nigeria imports at least 50 million litres of petrol per day to meet domestic demand. 

The National Bureau of Statistics (NBS), in its Foreign Trade Statistics for the Fourth Quarter of 2023, said Nigeria spent approximately N12 trillion on the importation of petroleum products in 2023, an 18.68% increase compared to the N10 trillion spent in 2022.

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