Diversification of Economy: Dangote Refinery, Fertilzer Projects Will Reduce Poverty

Posted by African Examiner Business News, Latest Headlines Monday, June 27th, 2016

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With efforts being diverted towards the diversification of the nation’s ailing economy, the Federal Government has described Dangote Fertilizer and Petrochemical projects as credible industrials undertaken capable of reducing poverty through generation of foreign exchange.

Vice-President, Professor Yemi Osinbajo and President of Dangote Group, Aliko Dangote said the Dangote Refinery, Petrochemicals and fertilizers reputed to be the biggest in Africa when completed offered hopes in the quest for diversification of Nigeria’s economy from total dependence on oil to other areas like Agriculture and Solid minerals.

Osinbajo who was on working visit to the site of the projects at Lekki Free Trade Zone in Lagos in company with Ministers of Finance; Power, Works and Housing; Solid Minerals Development as well as the Minister of State for Trade and Investments expressed amazement at the size of the projects and reiterated government’s preparedness to provide enabling environment for businesses to thrive.

He commended the business acumen Aliko Dangote saying the projects remained the most important in the country presently and must be supported as it would help Nigeria’s economy when completed.

The Vice-President explained that the federal government would harness the potentials of the private sector to make the nation economy recover speedily.

Addressing newsmen on the visit by the Vice-President, Dangote explained that the diversification of Nigeria economy was long overdue and that one sector that Nigeria can focuses on to rejuvenate the economy is agriculture.

He stated that his investment in fertilizer is one sure way the diversification into agriculture could succeeded because according to him, it will amount to little if focus is directed to agriculture and fertilizers would be imported.

Said he: It is agriculture is the way to go, but a critical component of that sector is fertilizers, Nigeria has more arable land than China which now is the biggest economy in the world, we can tap into our vast land and produce what we need and even export the remaining.

“By the time we complete this project, there will be opportunity to take on agriculture and say bye to poverty, because there will be jobs, no sector has more job potential than agriculture”

Dangote said the project was an ambitious one and that when completed it will give Nigeria a new economic direction in the quest for diversification of the economy, as excess products would be imported to give Nigeria the much needed foreign exchange. That is when diversification starts.

Earlier, Dangote told the Vice-President that the $12 billion refinery would have a capacity of 650,000 barrels a day. He assured that there will be market for the refined products because even in Africa, only three countries have effective functioning refinery with others importing from abroad.

Dangote named the countries with refinery as Egypt, South Africa and Cote ‘de Ivore saying our refinery be ready in the first quarter of 2019. Mechanical completion will be end of 2018 but we will start producing in 2019.”

When the projects fully take off in 2019, Dangote said it will effects help the country save $5 billion spent on the importation of oil into the country.

The Refinery, Petrochemicals and fertilizer in one spot according to him is the single largest stream in the world. “This site is the biggest site in the world, the refinery is the biggest single refinery in the world, the petrochemicals is 13 times bigger than Eleme petrochemicals while the fertilizer plant will be 10 times bugger than former National Fertilizer company .He explained that the project with the $2 billion fertilizer unit was the funded through loans, export credit agencies and our own equity.

Speaking on the forex situation and the purchase of dollar from the Central Bank, Dangote said the $161 million his companies bought during that period from the central bank merely reflected the size of his business and did not represent preferential treatment.

“We have been badly affected like any other company,” he said, arguing that operational costs totaled $100 million each month due to recurring expenses such as the purchase of parts for cement production and running a fleet of 9,000 trucks.

“When you are talking about 20 billion dollars worth of projects, what is 161 million? One-hundred-and-sixty-one million dollars is what I need in just six weeks,” he said.

“This week, the central bank removed the peg that has held the naira at the official rate of 197 for the last 16 months, leading to a 30 percent devaluation as the currency traded freely on the interbank market.

Dangote said the decline had pushed up costs.”This devaluation alone, we have lost over 50 billion naira ($176 million),” he said.

“The gas, which is our main source of power, is priced in dollars. If there is 40 percent devaluation, your price will go up by 40 percent. Every single aspect of the production will go up by that percentage,” he said.