Africa’s Shedding $90bn Yearly to Imported Substandard Gasoline, Dangote Laments 

…Says Dangote Refinery imports 9-10m barrels of crude month-to-month from US, others

Africa is more and more turning into a vacation spot for affordable, typically poisonous petroleum merchandise — a lot of that are blended to substandard ranges that will not be permitted in Europe or North America.

This concern was raised by the President/Chief Government, Dangote Industries Restricted, Aliko Dangote, in the course of the ongoing West African Refined Gasoline Convention held in Abuja. The occasion is organised by the Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA) and S&P International Commodity Insights.

Dangote revealed that, because of the continent’s restricted home refining capability, Africa imports over 120 million tonnes of refined petroleum merchandise yearly, at a price of roughly $90 billion.

Whereas appreciating the Administration of the Nigerian Nationwide Petroleum Firm Restricted (NNPC), for making some cargoes of Nigerian crude accessible to us from begin of manufacturing up to now, he revealed that the corporate, month-to-month import between 9-10 million barrels of crude from the US of America and different international locations. He stated: “As we communicate at this time, we purchase 9 – 10 million barrels of crude month-to-month from US and different international locations. I need to thank NNPC for making some cargoes of Nigerian crude accessible to us from begin of manufacturing up to now.”

Dangote additional acknowledged that regardless of producing round 7 million barrels of crude oil per day, Africa solely refines about 40% of its 4.3 million barrels day by day consumption of refined merchandise domestically. In stark distinction, Europe and Asia refine over 95% of what they eat.

“So, whereas we produce loads of crude, we nonetheless import over 120 million tonnes of refined petroleum merchandise every year, successfully exporting jobs and importing poverty into our continent. That’s a $90 billion market alternative being captured by areas with surplus refining capability. To place this in perspective: solely about 15% of African international locations have a GDP larger than $90 billion. We’re successfully handing over a whole continent’s financial potential to others—yr after yr,” he stated.

Whereas reaffirming his perception within the energy of free markets and worldwide cooperation, Dangote emphasised that commerce should be grounded in financial effectivity and comparative benefit — not on the expense of high quality or security requirements. He harassed that, “it defies logic and financial sense for Africa to be exporting uncooked crude solely to re-import refined merchandise—merchandise we’re greater than able to producing ourselves, nearer to each supply and consumption.”

Reflecting on the expertise of delivering the world’s largest single-train refinery, Dangote additionally highlighted a variety of challenges confronted, together with technical, industrial, and contextual hurdles distinctive to the African panorama.

Africa’s wealthiest man described constructing refineries such because the Dangote Petroleum Refinery as one of the vital capital-intensive and logistically advanced industrial amenities ever constructed. The Dangote refinery undertaking, he stated, required clearing 2,735 hectares of land (seven occasions the dimensions of Victoria Island), of which 70% was swampy, requiring the pumping of 65 million cubic metres of sand to stabilise the location and lift it by 1.5 metres, over 250,000 basis piles, and tens of millions of metres of piping, cabling, and electrical wiring amongst others.

“At peak, we had over 67,000 individuals on-site of which 50,000 are Nigerians, coordinating across the clock throughout a whole lot of disciplines and nationalities. Then, in fact, got here the COVID-19 pandemic which set us again by two years and introduced new ranges of complexity, disruption, and danger. However we persevered,” he famous.

The refinery additionally required the development of a devoted seaport, as current Nigerian ports couldn’t deal with the dimensions and quantity of apparatus required. This included over 2,500 items of heavy tools, 330 cranes, and even the institution of the world’s largest granite quarry, with a manufacturing capability of 10 million tonnes per yr.

“Briefly, we didn’t simply construct a refinery—we constructed a whole industrial ecosystem from scratch,” he stated.

Regardless of the refinery’s technical success, Dangote recognized important industrial challenges, notably trade charges which have gone from N156/$ at inception to N1,600/$ at completion, and challenges round crude oil sourcing. Though Nigeria is alleged to provide about 2 million barrels per day, the refinery has struggled to safe crude at aggressive phrases.

“Fairly than shopping for crude oil straight from Nigerian producers at aggressive phrases, we discovered ourselves having to barter with worldwide buying and selling corporations, who had been shopping for Nigerian crude and reselling it to us—with hefty premiums, in fact.

Logistics and regulatory bottlenecks have additionally taken a toll. Port and regulatory expenses reportedly account for 40% of whole freight prices, typically costing two-thirds as a lot as chartering the vessel itself.

“Refiners in India, who buy crude oil from areas even farther away, take pleasure in decrease freight prices than we do proper right here in West Africa as a result of they don’t seem to be saddled with exorbitant port expenses,” Dangote stated.

He added that, by way of port expenses, it’s presently costlier to load a home cargo of petroleum merchandise from the Dangote Refinery, as prospects pay each on the level of loading and on the level of discharge. In distinction, after they load from Lomé, which competes with them, they pay solely on the level of discharge.

Dangote additional criticised the shortage of harmonised gasoline requirements throughout African nations, which creates synthetic boundaries for regional commerce in refined merchandise.

“The gasoline we produce for Nigeria can’t be offered in Cameroon or Ghana or Togo, regardless that all of us drive the identical autos. This lack of harmonisation advantages nobody—besides, in fact, worldwide merchants, who thrive on arbitrage. For native refiners like us, it fragments the market and imposes pointless inefficiencies.”

Dangote, stating the problem with diesel manufacturing in Africa, famous, “to offer one instance, the diesel cloud level for Nigeria is 4 levels. With out going into the technical particulars, which means the diesel ought to work at a temperature of 4 levels centigrade. Reaching this comes at a price to us and limits the varieties of crude we might course of. However what number of locations in Nigeria expertise temperatures of 4 levels? Different African international locations have a extra affordable vary of seven to 12 levels. It is a low hanging fruit which could possibly be addressed by the regulators.”

He additionally cited the rising inflow of discounted, low-quality gasoline originating from Russia — blended with Russian crude below worth caps and dumped in African markets.

“And to make issues worse, we are actually dealing with growing dumping of low-cost, typically poisonous, petroleum merchandise—a few of that are blended to substandard ranges that will by no means be allowed in Europe or North America,” he stated.

Dangote referred to as on African governments to observe the instance of the US, Canada, and the European Union, which have carried out protecting measures for home refiners.