In order to expand its Lekki refinery to 1.4 million barrels per day, Dangote Industries Limited has purchased an extra 4,000 pieces of construction equipment, increasing its fleet to 6,500 machines.
Devakumar Edwin, Group Vise President, Oil, Gas & Fertiliser, made this revelation this Friday while giving editors a tour of the refinery in Ibeju-Lekki, Lagos.
According to Edwin, the business first purchased 2,563 pieces of equipment when Julius Berger and other contractors stated they were unable to build the refinery’s primary manufacturing structures.
In the end, we purchased 2,563 pieces of equipment. In terms of construction equipment, we grew to become the second-biggest company globally. Due to the expansion, we are now the biggest. We now have 6,500 pieces of construction equipment after purchasing an additional 4,000 pieces. “We purchased 330 cranes,” he stated.
He clarified that Aliko Dangote, President of the Dangote Group, decided to buy the equipment instead of hiring foreign engineering, procurement, and construction contractors after the business discovered that doing so would greatly raise project costs.
“If I hire a foreign contractor, I will have to transport all of his equipment in and out, and those folks will try to depreciate their equipment by adding it to our expenses. We wind up spending a lot of money in the end. “Very well, let’s go and buy all the construction equipment,” my president declared.
Edwin claimed that Julius Berger refused to build the major process buildings after looking at the refinery’s blueprints. “Sorry, but we are unable to complete any of your factory buildings,” they added. We don’t have the ability,” he remarked.
According to him, 43 of the roughly 127 auxiliary buildings—such as canteens, transformer rooms, control rooms, and firefighting houses—were later completed by the construction company.
Edwin claims that Nigeria’s lack of infrastructure also played a role in the company’s choice to develop its own fleet of construction equipment. He noted that Nigeria had just two sizable cranes, each with a 150-ton capacity, when Dangote constructed the Apapa sugar refinery in 1998.
The business bought 330 cranes of its own and contracted one of the two 5,000-ton cranes in the world for the Lekki refinery project. “It takes a lot of time to plan and a lot of money to invest in all these things that industries do not require when we are operating in a country with an infrastructure deficit,” he said.
According to Edwin, a large portion of the infrastructure built for the refinery’s initial phase would also be used for its expansion, lowering the project’s cost and duration.
A granite quarry with a capacity of 10 million tonnes, 82 concrete batching machines, 203 transit mixers, a private port, an oxygen and welding gas facility, and lodging facilities for 50,000 workers are among the infrastructure he named.
According to him, the refinery is already running beyond its nameplate capacity, even though it was only intended to handle 650,000 barrels of crude oil per day. Although the refinery was built for 650,000, we are currently running at 700,000. That exceeds the design capacity by more than 50,000 barrels per day. Thus, Edwin stated, “the production volumes are even higher.”
Edwin stated that foreign contractors had proposed prices of roughly 12.5% of an estimated $19.5 billion capital cost, which led to the decision to carry out the expansion using Dangote’s own project business.
He claimed that Dangote rejected the deal because the suggested costs would have totalled roughly $2.5 billion. Edwin remarked, “I said it’s insane to go and give two and a half billion dollars to a contractor as just a fee for designing and supervising.”
“Edwin, have you forgotten the plaque on my table?” was Dangote’s response, according to his quote. “Nothing is impossible” is written on the plaque, according to Edwin.
“That’s how we took on the challenge, and Dangote Projects Limited, a Nigerian company, designed the detailed engineering, went for the tenders, bought every single item—even the nuts and bolts—directly, hired contractors, and built the refinery,” he explained.
The largest plant before it had a capacity of 430,000 barrels per day, Edwin continued, adding that the refinery is still the biggest single-train petroleum refinery in the world.
According to him, the initial design of the refinery was predicated on both import substitution and exports, with 56% of production designated for export and 44% of production sufficient to meet Nigeria’s needs.
“We produce 95% high-value fuel, such as jet fuel, diesel, or petrol. He clarified, “Only five percent is lower, and even that five percent is an industrial product, carbon black feedstock.”
He continued by saying that the refinery was built to process a variety of African crude grades and US West Texas Intermediate crude in addition to producing Euro 5 and Euro 6-grade products.
Edwin claims that following the expansion and building of its 700,000 bpd refinery in Kenya, Dangote will have a 2.1 mbpd refining capacity.
