Dangote Industries Limited acquired 4,000 new construction machines to kick off the Lekki refinery expansion projectThe company rejected foreign contractors after international firms quoted fees of about $2.5 billion for design and supervision aloneThe Lekki refinery is already running above its 650,000 barrels-per-day design capacity, processing 700,000 barrels dailyPAY ATTENTION: Find it fast with our new search feature at Legit.ng! Legit.ng journalist Dave Ibemere has over a decade of experience in business journalism, with in-depth knowledge of the Nigerian economy, stocks, and general market trends.Dangote Industries Limited has purchased 4,000 additional pieces of construction equipment as it moves to expand its Lekki refinery in Lagos to a capacity of 1.4 million barrels per day.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. The Dangote Refinery expansion will increase its processing capacity from 650,000 to 1.4 million barrels per day. Photo: Bloomberg Source: Getty ImagesHe said the new purchase brings the company’s total construction fleet to 6,500 machines, among them 330 cranes.PAY ATTENTION: From breaking news to viral moments.
Follow Legit.ng on Instagram!Edwin explained that the company first 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 purchasing 2,563 pieces of equipment, becoming one of the largest holders of construction machinery in the world at the time, Punch reports. 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 later went on to construct 43 of roughly 127 support buildings on the site, covering facilities such as canteens, transformer rooms, control rooms and fire-fighting houses.Why Dangote rejected foreign contractorsThe decision to build in-house went beyond equipment. Edwin said international engineering, procurement and construction firms had quoted fees of about 12.5% of an estimated $19.5 billion capital cost for the refinery’s expansion, a figure that would have amounted to approximately $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.”Instead, Dangote Projects Limited took charge of the detailed engineering, procurement and contractor management for the entire project. Edwin said the approach meant every component, down to nuts and bolts, was purchased directly rather than through a foreign intermediary.He also noted that bringing in foreign contractors would have required shipping their equipment into and out of Nigeria, with depreciation costs passed on to Dangote.The Dangote Refinery was designed to produce petrol, diesel and jet fuel for domestic and export markets.
Photo: Bloomberg Source: Getty ImagesRefinery already running ahead of scheduleEdwin said the refinery, originally built to process 650,000 barrels of crude per day, is currently running beyond that figure.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.”Beyond Lekki, Dangote also 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. Source: Legit.ng Dave Ibemere (Senior Business Editor) Dave Ibemere is a senior business editor at Legit.ng.
He is a financial journalist with over a decade of experience in print and online media. He also holds a Master’s degree from the University of Lagos. He is a member of the African Academy for Open-Source Investigation (AAOSI), the Nigerian Institute of Public Relations and other media think tank groups. He previously worked with The Guardian, BusinessDay, and headed the business desk at Ripples Nigeria.
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