The Nigerian government is planing a presidential commissioning ceremony for the country's new 650,000 b/d Dangote refinery later this month, a week before president-elect Bola Tinubu is sworn into office. But commercial operations may not begin until next year.
"Efforts by the federal government to make Nigeria self-sufficient in local refining of crude oil to save the scarce foreign exchange used in the importation of petroleum products have received a boost as the 650,000 b/d Dangote Refinery, the world's largest single-train refinery, is set for inauguration on 22 May 2023 by President Muhammadu Buhari," said presidential spokesperson Bashir Ahmad.
Dangote, one of Africa's largest conglomerates, has said its refinery will start commercial operations 8-12 months after commissioning. This month's presidential inauguration event effectively starts the clock on commencement of commercial operations, according to a source at state-owned NNPC, which holds a 20pc stake in the refinery. Dangote told a conference in Lagos in February that the event would happen in April.
African investment bank Rand Merchant Bank — which acted as the joint issuing house and bookrunner for Dangote's Series 1 corporate bond issuance — said the refinery will "commence operations in the first half of 2023", but it has not responded to a request for clarification on whether that means commercial operations. The bond issuance, billed as the largest in any single year in the history of Nigerian capital markets, is "aimed at part-financing the completion" of the refinery, the bank said. The unsecured Series 1 bonds were listed last November and raised 187.58bn naira ($407mn). Series 2 bonds, also unsecured, were listed in March this year and raised N112.42bn ($244mn).
Oil-rich Nigeria is banking on the Dangote refinery to break its dependency on oil product imports. It has been totally reliant on other countries since state-owned NNPC shut down the 125,000 b/d Warri, 110,000 b/d Kaduna and 210,000 b/d Port Harcourt refineries in 2019-20. It mainly imports oil products from Europe, although it has been taking increasing amounts of Russian gasoline and diesel this year. NNPC is the sole importer of gasoline, which is subsidised.
Nigerian authorities said in August last year that the country would put an end to product imports in 2023, betting not only on the start of the Dangote refinery this year but also on the rehabilitation of the Port Harcourt refinery to 90pc of its capacity. The 2023 national budget made provisions for the gasoline subsidy only until June.
But both domestic refinery projects have suffered delays. The first phase of the Port Harcourt rehabilitation project missed its scheduled completion date last month and may may not be finished for another four months at least, refinery and oil ministry sources told Argus. Meanwhile, the national economic council of the outgoing Buhari government said in April that it may be necessary to review the June 2023 gasoline subsidy removal deadline when the new Tinubu administration takes over. Tinubu's inauguration is scheduled for 29 May.
