Culled from Punch
Indications emerged on Wednesday that the $8bn
refinery proposed by Africa’s richest man and President, Dangote Group, Alhaji
Aliko Dangote, would be located at the Olokola Free Trade Zone, Ondo State.
A senior official of the company, who asked not
to be named because he was not authorised to speak on the matter, told our
correspondent that the refinery would be located in the OFTZ.
One of the factors considered for the location of
the refinery, according to the source, is that it is the biggest deep seaport in
the country and other big industries are located there; besides, Ondo is one of
the oil producing states in the country.
The source added that stable crude oil supply was
also a vital element in the choice of the location for the refinery because
Chevron and a number of other oil producers had oil fields in the oil-rich
region of the state.
On why Lagos was not chosen, industry analysts
said though the state was a coastal state, Dangote would have to build pipelines
to transfer crude from oil fields to the refinery, thereby incurring additional
expenses.
The source explained that necessary approvals had
been secured for the refinery, adding that the Dangote Group was just waiting
for the necessary equipment with which to build the refinery to arrive.
Another source told our correspondent that
Dangote, who was listed on Monday as the first African entrepreneur to lay claim
to a $20bn fortune and one of the 25 richest men in the world, would put down
$4bn of his personal fortune to build the refinery, while international
financial institutions had raised the balance.
Dangote had in April announced plans to invest up
to $8bn in building an oil refinery with capacity for around 400,000 barrels a
day by late 2016.
The capacity, experts had said, would almost
double Nigeria’s current refining strength.
“This will really help not only Nigeria but
sub-Saharan Africa. There has not been a new refinery for a long time in
sub-Saharan Africa,” Dangote had told Reuters in a telephone
interview.
Nigeria currently has the capacity to produce
some 445,000 barrels per day in four refineries, which operate well below that
owing to decades of mismanagement and corruption in Africa’s leading energy
producer.
The country relies on subsidised imports for 80
per cent of its fuel needs.
Dangote said the country’s ability to import fuel
would soon be challenged.
“In five years, when our population is over 200
million, we won’t have the infrastructure to receive the amount of fuel we use.
It has to be done,” he said.
Past efforts to build refineries have often been
delayed or cancelled, but analysts have said Dangote should be able to build a
profitable Nigerian refinery, owing to his past successes in industry and his
strong government connections.
Analysts have said previous attempts to get the
refineries going were held back by vested interests such as fuel importers
profiting from the status quo.
“The people who were supposed to invest in
refineries, who understand the market, are benefiting from there being no
refineries because of the fuel import business. Some are going to try to
interfere,” Dangote said.
He said making a new refinery run at a profit
would work even if the government failed to scrap the subsidised fuel price that
has deterred others from investing.
“We’ve done our numbers and the numbers are
okay,” he said.
Dangote, who spoke on the sidelines of the recent
World Economic Forum on Africa in Cape Town, South Africa, said he had secured
$4.25bn loans from banks to build the refinery.
He said the loan was secured from “two offshore
banks and some Nigerian banks.” LOOD Naija
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