Dangote’s refinery plan faces delay

An oil refinery being built in Nigeria by Africa’s richest man is unlikely to start production until 2022, two years later than the target date, sources said.

The 650,000 barrel per day (bpd) refinery near Lagos, set to be Africa’s biggest, is expected to boost Nigeria’s growth and turn the country from an importer of refined products into an exporter, transforming global trade patterns.

Billionaire Aliko Dangote, who built his fortune on cement, told Reuters last month he hoped to finish building the refinery in 2019 and to start production in early 2020.

However, the sources, who have been on the site many times, said they do not expect gasoline or diesel output before early 2022 and even then, many units at the refinery and accompanying petrochemical plant would not be complete.

Wild imagination

Dangote Group Executive Director Devakumar Edwin, who oversees the project, described the suggestion that the refinery was unlikely to start production until 2022 as the product of “someone’s wild imagination”. “Ninety-five per cent of engineering has been completed, 90 per cent of procurement has been completed.”

“We started civil works in July last year and we have scheduled 2-1/2 years for mechanical completion,” he said, referring to the point where a plant is ready to be handed over for commissioning.

Dangote, who expects the project to cost $12-14 billion (Sh1.2 trillion-Sh1.4 trillion), said in July he had raised more than $4.5 billion (Sh450 billion).

“I’ve never seen a refinery of that scale built in two years. It’s highly improbable due to the sequence of events that need to happen, it cannot be fast-tracked safely,” a source advising the Nigerian government said. The sources said a refinery on such a scale would likely need five years to complete and the piling underpinning the plant had only started in the second half of last year and would take some more months to complete.

Extra piling was needed to support the plant’s units in the swampy area, causing an unforeseen delay, the sources said.