Aliko Dangote, Chairman of Dangote Group, is intensifying efforts to secure billions of dollars to guarantee a steady crude oil supply for his $20 billion refinery in Lagos. Touted as one of the largest in the world, the refinery is set to revolutionize Nigeria’s oil industry but faces significant financial and logistical hurdles.
The 650,000-barrel-per-day refinery aims to address Nigeria’s dependence on imported refined petroleum products. Currently operating at 420,000 barrels per day, Dangote expects the refinery to reach full capacity by mid-2025, although earlier deadlines have been postponed.
To ensure consistent crude supply, Dangote Industries is in talks with banks, oil traders, development financiers, and African oil producers, including Libya and Angola. Sourcing crude from markets such as the U.S. and Brazil has already begun. According to Devakumar Edwin, a senior Dangote executive, securing reliable crude is crucial to achieving the refinery’s production targets.
### **Funding and Financial Challenges**
Experts estimate that approximately $2 billion is needed every 90 days to maintain a minimum supply of 300,000 barrels of crude daily. This financial requirement, combined with the recent devaluation of Nigeria’s naira, has raised concerns about profitability.
The Nigerian National Petroleum Company Limited (NNPC) has committed to supplying 365,000 barrels per day to the refinery, with payments in naira to mitigate exchange rate volatility. However, doubts remain about NNPC’s capacity to meet these obligations due to its existing forward oil contracts. NNPC holds a 7.2% stake in the refinery, reduced from an initial 20% after financial challenges.
The Africa Finance Corporation (AFC), which has supported earlier financing rounds, is collaborating with Dangote to secure the necessary funds for crude procurement.
### **Market Implications**
Once fully operational, the refinery is expected to meet Nigeria’s petrol demand of 30–35 million liters daily, significantly reducing the country’s fuel import bill. However, concerns have been raised about Dangote’s potential to dominate the market, as seen in his cement business. Critics fear this could affect pricing and market competition.
### **Potential and Outlook**
If successful, Dangote’s refinery could transform Nigeria’s energy landscape, cutting fuel import costs, creating jobs, and boosting the economy. However, overcoming crude supply challenges and managing financial risks will be critical to its long-term success. The outcome of Dangote’s bold vision remains to be seen.
