By Opeyemi Adelakun
Dangote Industries Limited has acquired an additional 4,000 pieces of construction equipment as part of plans to expand its Lekki refinery in Lagos to a capacity of 1.4 million barrels per day.
The acquisition brings the company’s construction equipment fleet to about 6,500 machines, according to the Group Vice President, Oil and Gas and Fertiliser, Devakumar Edwin.
Edwin disclosed this on Friday while briefing editors during a tour of the refinery in the Ibeju-Lekki area of Lagos.
He explained that Dangote initially acquired 2,563 pieces of construction equipment after Julius Berger and other contractors indicated that they lacked the capacity to handle the construction of 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,” Edwin said.
According to him, the decision to acquire the equipment was taken after the company assessed the cost implications of engaging foreign engineering, procurement and construction contractors.
Edwin said bringing in foreign contractors would have required the company to pay for transporting their equipment into Nigeria and back out of the country, with the depreciation costs potentially passed on to the project.
He said Dangote Group President, Aliko Dangote, therefore directed the company to acquire its own construction equipment.
Edwin also recalled that Julius Berger initially declined to construct the refinery’s main process buildings after reviewing the project drawings, citing inadequate capacity.
The construction company later handled 43 of about 127 auxiliary buildings, including canteens, transformer rooms, control rooms and fire-fighting facilities, he said.
He said Dangote’s decision to develop its own construction capacity was also influenced by Nigeria’s infrastructure deficit.
According to Edwin, when Dangote built its Apapa sugar refinery in 1998, Nigeria had only two large cranes with a lifting capacity of 150 tonnes each.
For the Lekki refinery project, the company hired one of only two 5,000-tonne cranes available globally at the time, while also acquiring 330 cranes for its own operations.
“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 said.
Edwin added that much of the infrastructure established during the first phase of the refinery would be used for the expansion, thereby reducing the cost and duration of the additional work.
Among the existing facilities, he listed 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 and accommodation facilities capable of housing 50,000 workers.
The executive said the refinery, originally designed to process 650,000 barrels of crude oil per day, is currently 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.
He said the expansion was being executed through Dangote’s project company after international contractors reportedly quoted fees of about 12.5 per cent of an estimated $19.5bn capital cost.
Edwin said such charges could have amounted to roughly $2.5bn in fees alone, a proposal that the group rejected.
He said Dangote Projects Limited subsequently took responsibility for the detailed engineering, procurement and coordination of contractors involved in the refinery project.
“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 described the Lekki facility as the world’s largest single-train petroleum refinery, noting that the largest facility before it had a capacity of 430,000 barrels per day.
He said the refinery was designed to serve both the domestic and export markets, with 44 per cent of its production intended to meet Nigeria’s requirements and 56 per cent earmarked for export.
According to him, about 95 per cent of the refinery’s output comprises higher-value products such as petrol, diesel and jet fuel, while the remaining five per cent consists largely of industrial products, including carbon black feedstock.
He added that the refinery was designed to produce Euro 5 and Euro 6-grade petroleum products and process various African crude grades as well as United States West Texas Intermediate crude.
Edwin further said Dangote’s combined refining capacity would rise to about 2.1 million barrels per day following the expansion of the Lekki refinery and the planned construction of a 700,000-barrel-per-day refinery in Kenya.
Leave a Reply