Dangote refinery opts for shuttle vessels to evacuate products

By David Oladimeji |

As part of efforts to guarantee seamless evacuation of petroleum products from the Dangote Refinery, the company has decided to deploy shuttle vessels to get products into markets across the region.

The company also confirmed that it was going to construct a concrete road linking the refinery to Epe, in Lagos. The road is expected to serve as an alternative to a tolled road the Lagos State Government has proposed to build linking the Refinery to the major Lekki trunk road.

According to the Group Executive Director (Capital Projects & Portfolio Development), Dangote Industries Limited, Mr Edwin Devakumar,the refinery would utilize shuttle vessels which may be owned by the company or chartered from ship-owners to evacuate 75% of the refinery’s products while the rest will be moved by road.

However, he hinted that Dangote was trying to divest from transportation following numerous challenges it faced as the largest trucking company in the West and Central Africa region.

The refinery is also constructing facilities that will allow it to export its diesel, gasoline and other fuels to markets including Europe and Latin America aboard vessels as large as Suezmax tankers.

It is also designed to be able to produce diesel that meets European winter standards, and will be high quality enough to go to any market.

The refinery’s startup will be particularly tough on European refineries, which currently supply a large portion of gasoline consumed in West Africa, another Dangote executive speaking at the conference said.

“We can export the product all over the world. So there is no need for us to (blindly) compete with the local production,” Edwin said.

According to Edwin, Dangote’s business strategy has never been to eliminate its competitors, as competition was always a motivation to improve products and services.

However, the CEO, Eterna PLC, Mr. Mahmud Tukur had posited that due to the fact that the margins were in favour of larger refineries, the emergence of Dangote Refinery could eliminate the modular refineries as well as further imperil depot owners and marketers.

“Nigerian downstream companies have invested significantly in building depots. Nevertheless, a large amount of these depots are idle and there is a concern that the advent of the Dangote refinery would be the final nail on the coffins (depots) and marketers.

How would you measure your impact on these operators” Tukur asked the Dangote Group Executive Director under his platform as Vice Chairman of Depots and Petroleum Product Marketers Association (DAPPMA).

Having observed the palpable fear of private investors in the downstream sector, the Chairman, Nigerian Ports Consultative Council, Otunba Kunle Folarin admonished Nigerians not to be perturbed as the benefits of Dangote refinery outweigh the perceived fears.

Otunba’s argument was on the premise that the possibility of a monopoly in the sector by Dangote refinery couldn’t outweigh the efficiency and the fact that the refinery would replace the huge dependence on imports for petroleum products.

He advised Nigerian ship-owners to upgrade their services, acquire new vessels and develop capacity to optimize the potential of the facility. He noted that the existence of rickety bottoms and the inability of the federal government to float a National Fleet could subject indigenous ship-owners to further domination by their better equipped counterparts.