Nigeria has a problem: The country is one of the world's top oil producers, but it doesn't have enough gasoline to fuel its struggling economy.
On the outskirts of Lagos, Africa's richest man is building what he says is a solution to the country's fuel crisis: A massive, 650,000 barrel-per-day refinery that is designed to turn the country's crude oil into gasoline for hungry consumers. Aliko Dangote, a concrete magnate who is worth an estimated $15 billion, said the refinery and petrochemical plant has the potential to satisfy Nigeria's daily requirement of 445,000 to 550,000 barrels of fuel, with spare capacity to export.
"This one we are building will satisfy 100% of the [fuel] need of Nigeria," Dangote told CNNMoney.
There are reasons to believe Dangote will meet his goal of bringing the
factory online by late 2018: He has already completed several major
projects in Africa, including the world's largest sugar refinery and
cement factory.
If his refinery project is successful, Nigeria
could even become an exporter of gasoline and other petroleum products
to the region.
That would be a change welcomed by long-suffering Nigerians. The
country's four state-owned refineries are currently operating at just 5%
capacity following decades of poor maintenance, mismanagement and
corruption.
For average citizens, the lack of domestic refining
capacity has meant frequent power cuts and eight-hour lines at gas
stations.
"It is insane," said Mansur Ahmed, a director of
corporate communications at Dangote Group. "Nigeria produces between 2.2
million and 2.5 million barrels of crude per day, yet is not able to
process more than about 100,000 barrels per day."
Meanwhile,
plunging crude prices have pushed Africa's largest economy to the brink
of recession. Energy accounts for about 35% of Nigeria's gross domestic
product, 75% of government revenue and 90% of export earnings.
The government is now racing through its foreign currency reserves, and a
shortfall of $11 billion in its 2016 budget has forced officials to
discuss a potential cash infusion with the World Bank.
Dangote, for one, is not losing any sleep over low oil prices.
"People who own refineries are the best out there, making money," he
said. "The lower the crude oil price, the more profit that you make in
terms of refining margin."
At the refinery's planned oceanfront location, construction is
underway. Pipes have been laid and a massive dredging operation has
commenced, but the outline of a refinery has yet to emerge.
The company, however, is already putting competitors on notice.
"We certainly are putting a lot of people out of business, both local
entrepreneur, local suppliers of product, and also major international
importers to the country," said Ahmed.
http://money.cnn.com/2016/06/06/news/economy/nigeria-dangote-energy-oil-refinery/index.html
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