Dangote unveils first sample of petrol from new refinery

President of the Dangote Group, Aliko Dangote, has presented the first sample of Premium Motor Spirit (PMS), commonly known as petrol.

The announcement was made on September 3, 2024, during a broadcast from his state-of-the-art refinery located in the Ibeju-Lekki area of Lagos State.

Dangote stated:

“I would like to salute the people of Nigeria and the government of President Bola Tinubu for providing us with the platform for growth, development, and prosperity.”

He also extended his personal thanks to President Tinubu for introducing the Naira for crude concept, which he believes will enhance the stability of the Nigerian currency.

“The operational refinery will allow us to accurately monitor Nigeria’s true consumption patterns by tracking every loaded truck and ship,” Dangote added.

The new refinery is not only poised to meet the needs of Nigerians but is also expected to serve the broader sub-Saharan African region.

History of Dangote Group

The Dangote Group, founded by Dangote in 1981, has grown into one of the largest business conglomerates in Africa.

Initially, the group started as a trading firm, dealing primarily in commodities like cement, sugar, salt, and flour.

Over time, it expanded its into manufacturing, particularly in cement, which is now the largest revenue generator for the group.

The Dangote Cement company, for instance, is the largest cement producer in Africa, contributing significantly to Nigeria’s infrastructure development.

Apart from its dominance in the cement industry, the Dangote Group has also ventured into food processing.

It engages in the large-scale production of sugar, salt, and flour, playing a crucial role in Nigeria’s food security.

The group’s contributions to Nigeria’s economy are substantial, providing thousands of jobs and contributing to the country’s GDP.

Development of the Dangote Refinery

The idea for the Dangote Refinery was conceived as part of Aliko Dangote’s broader vision to reduce Nigeria’s dependency on imported petroleum products.

The Ibeju-Lekki refinery in Lagos State is a major African project with a $19 billion investment.

Construction started in 2016, facing delays from complex logistics, specialized equipment needs, and regulatory hurdles.

Despite these challenges, the refinery was successfully completed and began operations in 2023.

The refinery was funded by Dangote’s money, international loans, and global financial partnerships.

The project is a cornerstone of Dangote’s ambition to position Nigeria as a leader in Africa’s energy sector.

The concept of “Naira for crude”

“Naira for Crude” is an economic policy by President Tinubu to stabilize Nigeria’s currency by reducing foreign exchange outflows.

This policy is part of the broader reforms under Tinubu’s administration aimed at bolstering the Nigerian economy.

It addresses the challenges posed by dwindling foreign reserves and a volatile exchange rate.

The policy requires Nigerian crude oil sales to local refineries be in Naira, not foreign currencies like the US dollar.

Typically, Nigeria’s oil sales have traditionally been in dollars due to the global market’s reliance on the US dollar for transactions.

However, shifting to the Naira aims to reduce foreign currency demand, easing pressure on the Naira and supporting its value.

The “Naira for Crude” policy aims to keep crude oil revenue within Nigeria, circulating through the local financial system.

This move aims to reduce foreign currency use in local transactions and promote the Naira as a viable domestic currency.

Expert opinions

Economists and industry analysts have expressed mixed views on the long-term effects of the “Naira for Crude” concept.

Some say it strengthens the Naira and boosts Nigeria’s economy against external shocks.

For example, Dr. Muda Yusuf, an economist and former Director-General of the Lagos Chamber of Commerce and Industry, has noted that this policy could reduce Nigeria’s dependency on foreign currency.

This dependency has been a major challenge for the economy.

However, experts caution that the policy may struggle with acceptance in international markets and alignment with global trade practices.

Concerns arise over enforcement and potential unintended economic consequences, including increased smuggling and market distortions.

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