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Forex depreciation takes toll on $17b Dangote refinery

Chairman, Dangote Group, Alhaji Aliko Dangote, has said that the current effect of foreign exchange depreciation has taken its affected the project which was earlier estimated at N2.8 trillion.

He said this over the weekend during a visit by Vice President Yemi Osinbajo to the facility located at the Lekki Free Trade Zone in Lagos.

Dangote said the project which was earlier estimated would cost N2.8 trillion has now doubled to N4.8 trillion.

He said that the rise in cost, was based on the new exchange rate however, resounding his commitment to the multi-billion dollar project to aid the nation’s economy.

“We are putting in 65 million cubic meters of sand and that was why we brought in three dredgers, two of which are the biggest in the world.

“This place is eight times the size of Victorial Island,” he said.

Osinbajo also raised hope that by the first quarter of 2019, the refinery’s capacity, would be sufficient for the domestic market and export at the completion of Dangote refinery.

Osinbanjo said that the project would also boost gas supply to power plants through the three billion standard cubic feet per day gas pipeline.

He said the facility would buoy export earnings after meeting the nation’s current requirement of two billion standard cubit feet per day.

According to him, the gas pipeline, slated for commissioning in 2018, would take off from Bonny through Ogedegbe to Olokola and onward to Lekki.

He added that the line would hook up with Escravos-Lagos pipeline and the West African Gas Pipeline.

“The project is an incredible industrial undertaking and possibly the largest investment ambitious in the continent today. I think it is inspiring.

“The refinery would start production in the first quarter of 2019. The subsea gas pipeline, which is an important and strategic project is meant to take off in 2018,” he said.

The vice president described it as the highest investment in Africa and the biggest of its type in the world with a 650,000 barrels per day refining capacity.

The facility also includes a three million tonnes per year world single largest fertilizer plant; petrochemical plant; 400 Mega Watts power plant; and 1,100 kilometers of pipeline to handle three billion standard cubic feet per day.

Group Executive Director, Dangote Group, Devakumar Edwin, said the plant’s basic engineering is currently at 98 per cent completion while the construction is 10 per cent in progress.
He estimated that the project would aid the country with about $7.5 billion forex savings on import substitution; generate $5 billion forex earnings from savings and another $5.5 billion export earnings.
The plant, according to him, would generate over 100,000 employment opportunities and revive over 11,000 filling stations that have been shut down due to shortage of products.

He said the project was designed to process largely variety of crudes including all African crudes, a range of Middle Eastern crudes and U.S crudes.

On allegations of conflict with the host community, he said there are no issues, noting that the past issues were between two communities and the state government.

“We did not buy the land from communities, we bought our land (swamp) from the state government at $100 million and the filling up the swamp to become solid land is costing us another $420 million.
“The petrochemical is 13 times of Eleme Petrochemical. It is 10 times of Nafcon and therefore the largest fertiliser plant in Africa,” he said.

He said the holding company, Dangote Industries Limited, which is different from Dangote Refinery, took an initial loan for the project that has accrued an interest of $173 million.

He said that contrary to speculations, the company has not gotten substantial forex from the Central Bank of Nigeria.

Dangote stated the impact of the new forex policy on the project saying that “we lost almost N50 billion to new forex regime.

“ Every single money we make in the country is ploughed back into the economy. I don’t have a single block outside Nigeria, I am a proud Nigeria and I believe in this country,’’ he said.

He then urged government to sincerely pursue the diversification of the economy. According to him, the best way of diversification for Nigeria was agriculture and out fertilizer plant is in line with that goal.

“ By the time we finish out gas pipeline, it can generate about 12,000MW and we can export to other African countries.

“We would have the capacity to store four billion litres of products, and can load 2,680 trucks per day,” he said.

Dangote noted that the project would crash the price of Premium Motor Spirit (PMS) because the product is refined in-country, and will therefore save some costs incurred in the import market.

 

 

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