Nigeria's Dangote Completes $20 Billion Refinery After Years of Delays

Aliko Dangote, Chairman and President of Dangote Industries Limited, has described how entrenched interests benefiting from Nigeria's fuel import and subsidy regime tried to frustrate construction of his $20 billion refinery. In an interview with Nicolai Tangen, chief executive officer of the Norwegian Sovereign Wealth Fund, Dangote said resistance came from traders, shippers and local beneficiaries of Nigeria's petrol subsidy arrangement.

These interests worked to delay access to project land and frustrate the refinery's take-off, he stated.

"All this would have been blocked by what you call the mafia in oil business to make sure that we don't come and address these issues," he said. Securing land to build the refinery took five years. One site was delayed for three and a half years and another for one and a half years as vested interests sought to stop the project.

The refinery required the construction of an entirely new port, roads and water infrastructure. Dangote said small groups profited from local product allocations under the subsidy regime. Subsidy payments alone reached nearly $10 billion annually.

"The people who were actually benefiting because Nigeria was giving almost about $10 billion every year as subsidy... there are shippers who are making tonnes of money, there are traders who are making tonnes of money," he said.

"So these are the people that are not agreeing for us to settle down because they believe that no, we are coming here to displace them. Of course, that's what we have done now," he said. The refinery employed 67,000 people during construction.

Dangote said the project became far larger and more difficult than initially imagined. "When you get to the middle of the ocean, you realise that the tide was bad. When you go backwards, it's bad. So you have to work forward," he said.

"But we were not deterred at all. We knew what we were doing," he added. The refinery has now changed the market structure and reduced the influence of those who depended on imports and subsidy payments.

The plant currently sources over half of its crude from Nigeria. It sources about 56 per cent of its crude from Nigeria while also sourcing crude from Angola, Libya and the United States. At one point, the refinery was doing about seven to eight cargoes of WTI from the US.

AllAfrica reported that for decades Nigeria spent huge sums importing refined petroleum products despite being a major crude producer, creating a system that enriched a few players at the expense of the wider economy.