Dangote buys 4,000 more machines as Lekki refinery pushes toward 1.4m bpd

Dangote Industries Limited has purchased 4,000 additional pieces of construction equipment to expand its Lekki refinery in Lagos to 1.4 million barrels per day. The purchase lifts the company's total construction fleet to 6,500 machines, including 330 cranes.

The Group Vice President for Oil, Gas and Fertiliser, Devakumar Edwin, disclosed this on Friday during a media tour of the Dangote Petroleum Refinery in Ibeju-Lekki, Lagos.

Why Dangote built in-house

Edwin said the company entered the construction equipment business after Julius Berger and other contractors said they could not build the refinery's main processing facilities. Dangote responded by buying 2,563 pieces of equipment, which at the time made it one of the largest holders of construction machinery in the world.

Edwin said: "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."

Julius Berger still built 43 of roughly 127 support buildings on the site, covering canteens, transformer rooms, control rooms and fire-fighting houses.

The decision went beyond equipment. Edwin said international engineering, procurement and construction firms quoted about 12.5% of an estimated $19.5 billion capital cost for the expansion. That fee would have come to roughly $2.5 billion.

Edwin said: "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."

Dangote Projects Limited instead took charge of the detailed engineering, procurement and contractor management for the entire project. Edwin said every component, down to nuts and bolts, was bought directly rather than through a foreign intermediary.

He added that bringing in foreign contractors would have required shipping their equipment into and out of Nigeria, with depreciation costs passed on to Dangote.

Running above design capacity

The refinery was originally built to process 650,000 barrels of crude per day. Edwin said it is now operating above that level.

He said: "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."

Kenya plant and combined output

Beyond Lekki, Dangote plans to build a 700,000-barrel-per-day refinery in Kenya. Edwin said the combined capacity of both projects would give the group a total refining output of 2.1 million barrels per day.

The expansion matters for Nigeria's fuel import bill and for the naira, since more local refining cuts the dollars spent on imported petrol and diesel. A bigger Dangote footprint across Africa could also shift the group's trading flows, though the Kenyan project is still at the planning stage.