Nigeria is oil rich, no doubt. In fact, Nigeria produces only about 2.7% of the world's supply but produce a whole lot more. But Nigeria lacks operating refineries. The current ones only operate at less than 30 percent of their capacity. Now Africa's richest man, Aliko Dangote, has announced he will spend up to $8 billion to build a Nigerian oil refinery. The planned refinery will have a capacity of around 400,000 barrels a day and should be up and running by late 2016. This will almost double Nigeria's refining capabilities.
“Many Nigerians find it preposterous that their country is a wellspring of crude oil but has virtually no functional refinery because of corruption, vested interests and powerful cabals within and outside the Nigerian government,” explains Simon Ateba, senior correspondent at Nigeria's TheNews Magazine & P.M.NEWS. Because of the gang control, much-needed work has not been completed on refineries. “These gangs are involved in massive importation of refined petroleum products and have been enjoying heart-shattering and mind-boggling profit margins and are ready to do all it takes to frustrate the building of any refinery here,” says Ateba.
Currently, Nigeria has the capacity to produce about 445,000 barrels per day among its four refineries. But according to reports, these refineries operate well under their capacity due to years of mismanagement and corruption. So Dangote’s planned refinery is good news, says Ateba. “And so, having a functional refinery is a good thing for Nigeria and Nigerians. It will make it possible for crude oil to be refined here in Nigeria and may put a stop to gargantuan corruption taking place in the name of fuel subsidy,” he notes.
Many think it is ironic that the government of Nigeria, the continent's second-biggest economy, still relies on subsidized imports for 80 percent of its fuel and that a private citizen is taking it upon himself to try and solve the problem. “Instead of building refineries here, the Nigerian government has been spending billions of dollars in fuel subsidy because it’s expensive to take the oil abroad, refine it and bring it back to Nigeria,” says Ateba. “It’s a good thing the private sector is involved…It’s exactly what we expect the private sector to do as the government deregulates the sector even further. The refineries must operate within the law of the country.”
Due to Dangote Group's cement manufacturing, basic food processing and other industries, Dangote’s personal fortune has jumped to $16.1 billion from $2.1 billion in 2010, according to a Forbes estimate.
There are already two refineries in Nigeria’s main Port Harcourt oil hub, one in the Niger Delta town of Warri, and one in Kaduna in the north. None of them function at full capacity.