Dangote Industries Limited has acquired an additional 4,000 pieces of construction equipment as part of efforts to expand its Lekki refinery from 650,000 barrels per day to 1.4 million barrels per day.
The Group Vice President, Oil and Gas and Fertiliser, Devakumar Edwin, disclosed this on Friday during a briefing with editors who toured the refinery in Ibeju-Lekki, Lagos.
Edwin said the latest acquisition had increased Dangote’s construction equipment fleet to 6,500 machines, including 330 cranes.
He explained that the company initially purchased 2,563 pieces of equipment after Julius Berger and other contractors informed Dangote that they lacked the capacity to construct the refinery’s main factory buildings.
“We ended up buying 2,563 pieces of equipment. We became the second largest company in the world in terms of construction equipment. Today, we are the largest because of the expansion. We have bought 4,000 more pieces of equipment; we have 6,500 pieces of construction equipment. We bought 330 cranes,” he said.
According to him, Dangote Group President, Aliko Dangote, opted to purchase the equipment instead of bringing in foreign engineering, procurement and construction contractors after the company assessed the additional cost involved.
“If I bring in a foreign contractor, I’ll have to ship in all his equipment, and I’ll have to ship back all his equipment, and those guys will also try to depreciate their equipment by adding it to our cost. By the end of the day, we end up paying a lot of money. So my president said, very well, let’s go and buy all the construction equipment,” he said.
Edwin recalled that Julius Berger had initially reviewed the refinery’s drawings but declined to construct the main process buildings because of its limited capacity.
“They said, sorry, we cannot do any of your factory buildings. We don’t have the capacity,” he said.
He added that the construction company later worked on 43 of approximately 127 auxiliary buildings at the refinery, including canteens, transformer rooms, control rooms and fire-fighting houses.
Edwin said Dangote’s decision to build its own construction equipment fleet was also influenced by the country’s infrastructure deficit, noting that the company had encountered similar challenges during the construction of its Apapa sugar refinery in 1998.
He said Nigeria had only two large cranes with a 150-tonne capacity at the time, while the Lekki refinery project required one of only two 5,000-tonne cranes available globally. Dangote subsequently purchased 330 cranes for the project.
“When we are operating in a country with an infrastructure deficit, it takes a lot of time to plan, a lot of money to invest in all these things that industries do not require,” he stated.
According to him, infrastructure developed during the first phase of the refinery would be reused for the expansion, helping to reduce both the cost and duration of the project.
He listed the existing facilities as including a granite quarry with a 10 million-tonne capacity, 82 concrete batching plants, 203 transit mixers, a private port, an oxygen and welding-gas plant, as well as accommodation facilities capable of housing 50,000 workers.
Edwin also disclosed that the refinery, which was originally designed to process 650,000 barrels of crude oil daily, was already operating above its nameplate capacity.
“We have designed the refinery for 650,000, but we are now operating at 700,000. That is over 50,000 barrels per day above the design capacity. So the production volumes are even higher,” Edwin said.
On the decision to use Dangote’s own project company for the expansion, Edwin said international contractors had proposed charging about 12.5 per cent of the estimated $19.5bn capital cost as fees.
He said this would have amounted to approximately $2.5bn, prompting Dangote to reject the arrangement.
“I said, it’s madness to go and give two and a half billion dollars to a contractor as just a fee for designing and supervising,” Edwin said.
He quoted Dangote as replying, “Edwin, have you forgotten the plaque on my table?” According to Edwin, the plaque carries the inscription, ‘Nothing is impossible’.
“That is how we took up the challenge, and a Nigerian company, Dangote Projects Limited, designed the detailed engineering, went for the tenders, bought every single item, even the nuts and bolts, we bought directly, and engaged contractors, and we constructed the refinery,” he said.
Edwin said the Dangote refinery remained the world’s largest single-train petroleum refinery, adding that the largest facility before it had a capacity of 430,000 barrels per day.
He explained that the original design was based on both import substitution and exports, with 44 per cent of the refinery’s output intended to meet Nigeria’s domestic needs and 56 per cent earmarked for export.
“95 per cent of our production is high value, either petrol or diesel or jet fuel. Only five per cent is lower, and even that five per cent is actually an industrial product, carbon black feedstock,” he explained.
He added that the refinery was designed to produce Euro 5 and Euro 6-grade products and process various African crude grades, as well as United States West Texas Intermediate crude.
Edwin said Dangote’s total refining capacity would rise to 2.1 million barrels per day following the Lekki refinery expansion and the planned construction of its 700,000-barrel-per-day refinery in Kenya.
