Aliko Dangote, President of the Dangote Group, has revealed ambitious plans to list the fertilizer and petrochemical business of the Dangote Refinery on the stock exchange in the first quarter of 2025.

This announcement comes at a time when the refinery, Africa’s largest, is grappling with significant challenges in securing a steady supply of crude oil.

During a media briefing at the Dangote Refinery, Aliko Dangote emphasized the importance of involving Nigerians in the ownership of the refinery and its associated businesses.

“Because of the nature of the business we have, both the refinery and the fertilizer, we are targeting end of this year but it depends, most likely, worst case we will be able to list them before the end of first quarter of next year, so that we will sell shares and Nigerians will buy.” Dangote stated

This move follows recent reports that Dangote plans to pursue dual listings of the refinery on both the London and Nigerian stock exchanges. Dangote has a history of listing many of his businesses, such as Dangote Cement, which is currently the most capitalized company in Nigeria with a market valuation exceeding N11 trillion.

The refinery has previously held stakes by entities like the Nigerian National Petroleum Corporation (NNPC). However, Dangote revealed on Sunday that the state-owned company holds only a 7.2% stake in the refinery, not the 20% that was previously reported.

The Dangote Refinery, positioned as Africa’s largest oil refinery and the world’s largest single-train facility, is poised to transform Nigeria’s oil industry. Situated in the Lekki Free Trade Zone, this state-of-the-art facility boasts a production capacity of 650,000 barrels per day (bpd).

The refinery includes a 900 ktpa polypropylene plant, a 36 ktpa sulfur plant, and a 585 ktpa carbon black production unit. It features a total storage capacity of 4.5 billion liters, ensuring Nigeria’s crude and gasoline requirements for 20 and 15 days, respectively.

After completing its test run in January 2024, the refinery transitioned to steady-state production by March 2024. Production is set to increase to 500,000 bpd by August 2024, 550,000 bpd by the end of the year, and reach its full capacity of 650,000 bpd by the first quarter of 2025. Gasoline production is expected to commence in July 2024, with sales starting in August. The annual revenue from the refinery is projected to exceed $26 billion.

Crude Oil Supply Challenges

Despite its advanced infrastructure and ambitious targets, the Dangote Refinery faces a significant hurdle: securing a consistent supply of crude oil. The inability of the NNPC to provide adequate crude has forced the refinery to look beyond Nigerian borders. As a result, the Dangote Refinery has begun sourcing crude oil from international markets, including the United States, Brazil, and other countries.

However, sourcing crude oil from international markets has logistical and financial implications for the refinery. While the refinery is expected to reduce the cost of petroleum products in the country, analysts have warned that importing crude oil means higher transportation costs and longer lead times, which can disrupt production schedules and increase the overall cost of refining. These additional costs are likely to be passed on to consumers, potentially impacting the price of petroleum products in Nigeria.

Moreover, analysts have pointed out that relying on international crude suppliers exposes the refinery to global market fluctuations and geopolitical risks. Any disruption in supply chains, such as political instability in supplier countries or changes in international trade policies, could adversely affect the refinery’s operations.

In response to these challenges, the Dangote Refinery has made strategic adjustments to its operations. The facility’s configuration has been optimized to minimize the production of low-value products and maximize the output of more profitable crudes and products. This flexibility allows the refinery to adjust its production based on the quality and cost of the crude oil available, thereby enhancing its economic viability.

Additionally, the large-scale operation of the refinery helps to reduce production costs and enables it to serve a vast market efficiently. By leveraging economies of scale, the Dangote Refinery aims to maintain competitive pricing despite the higher costs associated with importing crude oil.

The listing of the refinery and its associated businesses on the stock exchange is expected to provide a significant boost to the company’s capital base. The influx of investment from public shareholders is expected to enable the refinery to expand its operations, invest in new technologies, and possibly secure more stable sources of crude oil in the long term.

Nigeria’s inflation has defied all efforts by the government, rising once again in June to a record 34.19%, according to the latest report from the Nigerian Bureau of Statistics (NBS).

The headline inflation was up from 33.95% in May 2024, marking an increase of 0.24 percentage points within a month and a substantial year-on-year jump of 11.40 percentage points from the 22.79% recorded in June 2023.

The report highlighted that on a month-on-month basis, the headline inflation rate in June 2024 was 2.31%, a 0.17 percentage point rise from the 2.14% recorded in May 2024.

“The percentage change in the average Consumer Price Index (CPI) for the twelve months ending June 2024 over the previous twelve-month period was 30.00%, showing an 8.45 percentage point increase compared to the 21.54% recorded in June 2023,” it said.

Urban areas are feeling the brunt of the inflationary pressures more acutely. The urban inflation rate in June 2024 was 36.55% on a year-on-year basis, 12.23 percentage points higher than the 24.33% recorded in June 2023. On a month-on-month basis, urban inflation rose to 2.46% in June 2024, up from 2.35% in May 2024.

The NBS said, “The twelve-month average for urban inflation was 32.08%, reflecting a 9.70 percentage point increase from the previous year.”

In contrast, rural areas, while still experiencing significant inflation, have slightly lower rates. The rural inflation rate in June 2024 was 32.09% year-on-year, up by 10.71 percentage points from the 21.37% recorded in June 2023.

“On a month-on-month basis, rural inflation increased to 2.17% in June 2024 from 1.94% in May 2024,” the report said. It added that “the twelve-month average for rural inflation was 28.15%, a rise of 7.39 percentage points from June 2023.”

Food inflation remains the most concerning aspect of Nigeria’s economic woes. The food inflation rate in June 2024 was a staggering 40.87% year-on-year, up by 15.62 percentage points from 25.25% in June 2023.

The increase in food prices was driven by rising costs of essential items such as millet, garri, guinea corn, yams, water yams, coco yams, groundnut oil, palm oil, and various fish products.

On a month-on-month basis, the food inflation rate was 2.55% in June 2024, a 0.26 percentage point rise from 2.28% in May 2024.

The NBS attributed this increase primarily to higher prices for groundnut oil, palm oil, water yams, coco yams, cassava, tobacco, fresh catfish, croaker, mudfish, and snails.

Economists have noted that Nigeria’s rising food inflation is a direct consequence of insufficient local food production, with the nation restricting food importation.

The core inflation rate, which excludes the prices of volatile agricultural produce and energy, stood at 27.40% year-on-year in June 2024, up by 7.34 percentage points from 20.06% in June 2023.

“The highest increases were observed in housing rentals, intercity bus journeys, motorcycle journeys, accommodation services, medical consultation fees, laboratory services, X-ray photography, and pharmaceutical products,” the report said.

On a month-on-month basis, the core inflation rate was 2.06% in June 2024, slightly up from 2.01% in May 2024. The average twelve-month annual inflation rate was 24.06% for the twelve months ending June 2024, up by 5.59 percentage points from 18.47% in June 2023.

The NBS report also highlighted significant regional variations in inflation rates. Year-on-year, the highest inflation rates were recorded in Bauchi (43.95%), Kogi (39.91%), and Oyo (39.15%), while Borno (25.90%), Benue (27.52%), and Katsina (29.21%) had the slowest rise. Month-on-month, the highest increases were in Yobe (3.79%), Abuja (3.45%), and Ondo (3.38%), while Nasarawa (0.71%), Osun (1.19%), and Kano (1.27%) recorded the slowest rise.

In terms of food inflation, the highest year-on-year rates were observed in Edo (47.34%), Kogi (46.37%), and Cross River (45.28%), while Nasarawa (34.31%), Bauchi (34.78%), and Adamawa (35.96%) had the slowest rise. Month-on-month, the highest increases were in Yobe (4.75%), Adamawa (4.74%), and Taraba (4.12%), while Nasarawa (0.14%), Kano (0.96%), and Lagos (1.25%) recorded the slowest rise.

In response to the worsening food crisis, the government has been compelled to reverse its earlier decision not to import food. Last week, the federal government announced plans to allow duty-free importation of food items such as maize, rice paddy, and wheat for 150 days to stabilize market prices.

This move, while necessary to address the immediate food shortages, has sparked controversy among local farmers and agricultural associations, who fear it will undermine domestic production efforts.

However, economists believe that the persistent increase in food prices is a clear indicator of the challenges the country faces in local food production. Many note that the Nigerian agricultural sector is struggling to keep up with demand, and this has forced prices to skyrocket.

With headline inflation at 34.19% and food inflation at 40.87%, Nigeria faces a critical challenge in balancing immediate food needs with long-term agricultural sustainability.

Stakeholders in the agricultural sector believe that while the government’s recent decision to allow food imports may offer temporary relief, it underscores the urgent need for a more robust and sustainable approach to food production and economic stability.

They note that investing in agriculture, supporting farmers with better access to resources, and implementing policies that promote self-sufficiency are essential steps to ensure long-term food security and economic stability in Nigeria.