On May 22, 2023, the African petroleum sector witnessed a historic event. The Dangote Refinery and Petrochemical Limited, a multi-billion dollar project was commissioned in Lagos, Nigeria. The refinery, located in Ibeju-Lekki on the Lekki peninsula is reputed to be the largest single train refinery in the world. It has a daily processing capacity of 650,000 barrels of crude oil. The refinery is expected to cater for the demands of Nigeria and other African countries, as well as save foreign exchange for the continent.

The commissioning ceremony was attended by at least two African presidents and other dignitaries. The President of the Dangote Group, Alhaji Aliko Dangote, reaffirmed his commitment to solving some of the economic challenges faced by Africa. He also called for the removal of trade barriers within the continent.

The Benefits of the Refinery

The refinery is expected to bring several benefits to Africa, especially with the African Continental Free Trade Agreement (AfCFTA) already in operation. Some of these benefits are:

• Reducing the cost of energy on the continent by providing cheaper and more accessible refined petroleum products than importing from Europe, India, or America.
• Strengthening the African economy by reducing its dependence on foreign exchange and enhancing intra-continental trade.
• Creating jobs and opportunities for local businesses and communities in the refinery’s value chain.

According to Statista, Africa imported 2.32 million barrels of refined petrol per day in 2020. At the current rate of about $75 per barrel, this means Africa spent an average of $316.5 million daily, or $115.5 trillion annually on refined petroleum products.

With the Dangote Refinery in operation, Africa can reduce its import bill and retain more of its wealth within the continent.

The 650,000 Dangote refinery project in Nigeria is Africa’s biggest refinery project to date. Credit: MAN

The Challenges of the Refinery

Not everything is rosy about the refinery project. The refinery faces some challenges that may limit its impact or even pose a threat to its sustainability. Some of these challenges are:

• The global drive for decarbonization and energy transition, which may reduce the demand for fossil fuels and increase the pressure for cleaner energy sources.
• The African Union (AU) Green Recovery Action Plan (2021-2027), which aims to promote low-carbon development and green recovery from the COVID-19 pandemic.
• Nigeria’s National Economic Council (NEC) supports for the mass-production of electric vehicles and compressed natural gas-powered vehicles in the country, in line with the AU’s decarbonization agenda and recovery plan.

These initiatives may undermine the viability of the refinery in the long run, as more people switch to alternative energy sources and reduce their reliance on petrol.

The Dilemma of Decarbonisation

The refinery poses a dilemma for Africa’s commitment to decarbonization and green recovery. The rest of the world is gradually moving away from carbon-laden sources of energy and embracing green practices such as electric cars and solar energy. This means that the owners of oil wells and refineries across the world, including Africa, may lose their relevance in the near future. The launch of the Green Recovery Action Plan by the AU is a strong signal that Africa is also joining the global effort to reduce greenhouse gas emissions and combat climate change. Celebrating the birth of a carbon energy-producing facility may therefore sound inconsistent with Africa’s pledge to go green.

Moreover, the AfCFTA, which is expected to facilitate trade integration and economic development in Africa, cannot afford to ignore the issues affecting climate change. The AfCFTA has to align its policies and practices with the AU’s vision of a low-carbon and resilient continent. Celebrating the commissioning of an oil refinery may send a mixed message to the global stakeholders and undermine the credibility of the AfCFTA. It may seem like the AfCFTA is approbating and reprobating at the same time on the issue of decarbonization.

The Need for a Balance

However, it would be delusional for Africa to think that the commissioning of the refinery is not worth celebrating at all, as the continent is still lagging far behind in the area of green technology. It may take some time for Africa to be completely weaned from carbon energy. It may not happen with the expected immediacy. Therefore for now, the Dangote Refinery may still serve a need for the continent, as stakeholders will have to strike a balance between what is needed presently and what will be needed in the future. In other words, Africa may still have to live with carbon energy as part of the energy mix, until such a time when green energy will have taken a firm root on the continent.

Adebayo Abubakar is a Nigerian journalist. You can reach him via email: marxbayour@gmail.com

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