Dangote-Honeywell petrochemical deal to boost economy – Stakeholders

Nigeria’s industrial economy will receive a major boost following a large-scale investment in petrochemicals involving Dangote Refinery and Honeywell UOP, stakeholders in the manufacturing sector have told The PidomNigeria.

The stakeholders noted that the partnership would reduce import dependence, ease pressure on foreign reserves, strengthen the naira, and create significant multiplier effects across industries through backward integration.

On 20 April, Dangote Refinery announced that it has entered into a deal to deploy Honeywell UOP’s Oleflex™ technology to produce an additional 750,000 metric tonnes of propylene annually, a key input in packaging materials, consumer goods, and other industrial products. The refinery also plans to produce 400,000 metric tonnes per year of Linear Alkyl Benzene, a major ingredient in detergents.

According to Reuters, the financial details of the Dangote-Honeywell deal were not disclosed. However, industry operators acknowledged its potential and affirmed that it will benefit the economy.

The Deputy National President of the National Association of Small-Scale Industrialists, Segun Kuti-George, described the development as long overdue, stressing that a refinery should operate as a multi-product industrial hub.

“It is a welcome development. Normally, what we had was a situation whereby you have a refinery that is doing only petroleum, which is abnormal. A refinery is a multi-product setup,” Kuti-George said.

He added that Nigeria’s heavy reliance on imported petrochemical inputs had been a major drain on foreign exchange.

“As at the last time I checked, Nigeria imports resins worth several billions of dollars in one year because resin is a multipurpose product used in paint manufacturing, plastic manufacturing and several other industries. Nigeria spends a lot of money on the importation of resin annually, which should not be”, Kuti-George said.

Kuti-George noted that the development would unlock opportunities across multiple sectors and reduce dependence on foreign inputs.

“My company uses polyester resin to produce cultured marble and granite, but we import resin. We have imported from South Africa, Singapore, the US, China, and Turkey. So, this initiative is a huge potential good for other industries like plastics, paint, and several others,” Kuti-George said.

The NASSI VP emphasised that the initiative would strengthen backward integration and reduce pressure in the foreign exchange market.

“Backward integration is the ability to use what you can get locally rather than importing your input.

 It will save foreign exchange, help shore up the value of the naira, create employment, and generally improve the economy. Kuti-George stated, “This is a mutually beneficial situation for us.”

He urged the government to sustain the momentum by creating an enabling environment and protecting local industries.

“It is to create and continue to create an enabling environment and, where necessary, protect local industries and encourage patronage. If we begin to produce all these by-products locally, it will be a plus for our economy,” Kuti-George said.

Similarly, the Chief Executive Officer of the Centre for the Promotion of Private Enterprise, Dr Muda Yusuf, described the partnership as a game-changer for Nigeria’s economy.

“This business partnership between Dangote Refinery and Honeywell is a very significant development for the Nigerian economy. It portends very bright prospects for backward integration, less import dependence, greater multiplier effects within the manufacturing ecosystem, more job creation, and conservation of foreign exchange,” Yusuf said.

He observed that the investment would reduce Nigeria’s reliance on imported industrial raw materials, particularly in plastics and detergent production.

“One of the biggest import goods in the economy is industrial raw materials, many of which are related to polypropylene, plastics, and raw materials used for detergents. With this investment, it will reduce import dependence and bring relief to our foreign reserves and exchange rate while creating significant multiplier effects due to backward integration,” Yusuf said.

Yusuf further noted that the initiative would enhance economic linkages, improve industrial capacity, and support export potential: “It is a major development from the macroeconomic, integration, and economic security perspectives. It will also improve linkages within the economy and create opportunities for exports. From many perspectives, it is a very good development.”

He called on the government to provide policy support to sustain growth in the sector: “What the government needs to do is to support these industries with the right fiscal and trade policies, long-term financing, policy consistency, and tariff protection so that domestic manufacturing can grow, scale, and become globally competitive.”

Stakeholders maintained that the Dangote-Honeywell partnership marks a critical step towards deepening Nigeria’s petrochemical value chain, reducing import bills, and strengthening the country’s industrial base.