Africa is increasingly becoming a dumping ground for cheap, often toxic, and substandard petroleum products that would never be permitted in Europe or North America.
This stark warning was issued by Aliko Dangote, President/Chief Executive of Dangote Industries Limited, during the ongoing West African Refined Fuel Conference in Abuja.
The event, organised by the Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA) and S&P Global Commodity Insights, served as a platform for Dangote to articulate a dire economic and environmental challenge facing the continent.
Dangote revealed that due to Africa's limited domestic refining capacity, the continent imports over 120 million tonnes of refined petroleum products annually, incurring a staggering cost of approximately $90 billion.
This massive expenditure represents a colossal economic leakage, effectively exporting jobs and importing poverty.
“To put this in perspective,” Dangote noted, "only about 15% of African countries have a GDP greater than $90 billion.
“We are effectively handing over an entire continent’s economic potential to others, year after year.
“Despite producing around 7 million barrels of crude oil per day, Africa only refines a mere 40% of its 4.3 million barrels daily consumption domestically.
“This is in stark contrast to developed regions like Europe and Asia, which refine over 95% of their consumption.”
This glaring disparity, Dangote argued, highlights a fundamental inefficiency and a profound economic opportunity being squandered.
While acknowledging the support from the Nigerian National Petroleum Company Limited (NNPC) for making some Nigerian crude available, Dangote disclosed that his company still has to import between 9-10 million barrels of crude monthly from the United States of America and other international markets.
“As we speak today, we buy 9 – 10 million barrels of crude monthly from the US and other countries.
“I must thank NNPC for making some cargoes of Nigerian crude available to us from the start of production to date,” he stated.
Reflecting on the monumental task of delivering the world’s largest single-train refinery, the Dangote Petroleum Refinery, Dangote shed light on the immense technical, commercial, and contextual hurdles faced on African soil.
He described the construction as one of the most capital-intensive and logistically complex industrial facilities ever built.
The project, he said, required the clearing of a massive 2,735 hectares of land, seven times the size of Victoria Island, with 70% being swampy terrain.
“This necessitated pumping 65 million cubic metres of sand to stabilise the site and raise it by 1.5 meters, followed by the installation of over 250,000 foundation piles and millions of meters of piping, cabling, and electrical wiring.
“At peak, we had over 67,000 people on-site, of which 50,000 are Nigerians, coordinating around the clock across hundreds of disciplines and nationalities,” Dangote recounted.
The COVID-19 pandemic further complicated matters, setting the project back by two years and introducing new levels of disruption and risk, yet, he affirmed, “we persevered.”
The sheer scale of the project also demanded the construction of a dedicated seaport, as existing Nigerian ports simply could not handle the size and volume of equipment.
This included over 2,500 pieces of heavy equipment, 330 cranes, and even the establishment of the world’s largest granite quarry with a production capacity of 10 million tonnes per year.
“In short, we didn’t just build a refinery, we built an entire industrial ecosystem from scratch,” Dangote asserted.
Despite the refinery’s technical triumph, Dangote highlighted significant commercial challenges that continue to impede its optimal operation.
He said, “The volatile exchange rate, which plummeted from N156/$ at the project's inception to N1,600/$ at completion, has taken a heavy toll.
“Furthermore, securing crude oil at competitive terms has proven unexpectedly difficult, despite Nigeria's status as a major oil producer.
“Rather than buying crude oil directly from Nigerian producers at competitive terms, we found ourselves having to negotiate with international trading companies, who were buying Nigerian crude and reselling it to us, with hefty premiums, of course.”
Dangote equally exposed a systemic issue that disadvantages local refiners.
Dangote pointed out that port and regulatory charges can account for a staggering 40% of total freight costs, sometimes amounting to two-thirds of the cost of chartering the vessel itself.
He drew a stark comparison: “Refiners in India, who purchase crude oil from regions even farther away, enjoy lower freight costs than we do right here in West Africa because they are not saddled with exorbitant port charges.”
Adding to the absurdity, Dangote stated that it is currently more expensive to load a domestic cargo of petroleum products from the Dangote Refinery, as customers incur charges at both the point of loading and the point of discharge.
In contrast, competitors loading from Lomé pay only at the point of discharge, creating an uneven playing field.
A significant barrier to regional trade and efficiency, according to Dangote, is the lack of harmonised fuel standards across African nations.
This fragmentation creates artificial obstacles for the circulation of refined products.
“The fuel we produce for Nigeria cannot be sold in Cameroon or Ghana or Togo, even though we all drive the same vehicles.
“This lack of harmonisation benefits no one, except, of course, international traders, who thrive on arbitrage.
“For local refiners like us, it fragments the market and imposes unnecessary inefficiencies,” he lamented.
He provided a specific example with diesel production: “To give one example, the diesel cloud point for Nigeria is 4 degrees.
“Without going into the technical details, this means that the diesel should work at a temperature of 4 degrees centigrade.
“Achieving this comes at a cost to us and limits the types of crude we could process. But how many places in Nigeria experience temperatures of 4 degrees?
“Other African countries have a more reasonable range of 7 to 12 degrees. This is a low-hanging fruit which could be addressed by the regulators,” he added.
Compounding these challenges, according to Dangote, is the increasing influx of discounted, low-quality fuel, often originating from Russia, blended with Russian crude under price caps and then “dumped” in African markets.
“And to make matters worse, we are now facing increasing dumping of cheap, often toxic, petroleum products; some of which are blended to substandard levels that would never be allowed in Europe or North America,” he warned.
Reaffirming his belief in free markets and international cooperation, Dangote stressed that trade must be founded on economic efficiency and comparative advantage, not at the expense of quality or safety standards.
He emphasised that, “it defies logic and economic sense for Africa to be exporting raw crude only to re-import refined products, products we are more than capable of producing ourselves, closer to both source and consumption.”
Dangote concluded his impassioned address by calling on African governments to emulate the protective measures implemented by nations like the United States, Canada, and the European Union for their domestic refiners.
Such policies, he argued, are crucial to shield nascent African refining capacities from predatory practices and ensure the continent can truly harness its vast energy resources for its own development and prosperity, rather than continuing to bleed billions and import pollution.
All rights reserved. The content on this website, including text and other digital materials, may not be reproduced, published, broadcast, rewritten, or redistributed, in whole or in part, without the express written consent of The News Accelerator Network.
For advertising inquiries, news coverage, or press releases, please get
in touch with us at
📧 thenewsacceleratornetwork@gmail.com
📞 0805 101 7159, 0814 404 8512.
Post a Comment