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In July 2025, Backbone Infrastructure Nigeria Limited (BINL) signed a Memorandum of Understanding (MoU) with the Ondo State Government, executed through the Ondo State Investment Promotion Agency (ONDIPA), to develop a large-scale refinery and free trade zone in the State. The project which is to be located in Ilaje Local Government Area, is expected to feature modern refining facilities, terminals, storage infrastructure, and a 1,471-hectare "Sunshine Free Trade Zone" hosting industrial clusters and logistics hubs.
By November 2025, BINL was reported to have secured a $50 billion funding commitment for both the construction of a 500,000 barrels-per-day refinery and the Sunshine Free Trade Zone, through a joint venture agreement with Canadian partner, NEFEX Holdings Limited. The funding commitment signals a significant step toward implementation of the project, although drawdown would depend heavily on meeting regulatory, technical, and investment conditions. This project presents a major opportunity to accelerate industrialization in Ondo State and across Nigeria's energy sector by transforming Ondo State into a key refining and export hub, expanding Nigeria's refining capacity to attract global investors, and creating a hub for energy, manufacturing, logistics, and export trade.
Considering the ambitious nature of this project, questions arise as to the reliability of crude supply and the feasibility of meeting projected timelines. The experience of the Dangote Petroleum Refinery offers a cautionary lesson, despite its 650,000-barrels-per-day design capacity, the refinery has struggled to consistently secure sufficient domestic crude feedstock to operate at full scale. To stay active, it has reportedly relied on importing about nine (9) to ten (10) million barrels of crude oil monthly from the United States and Europe rather than sourcing directly from Nigerian producers at competitive terms. This underscores how challenges in crude allocation, logistics, and upstream coordination can constrain even the most well-financed refining projects. The success of Ondo's $50 billion ambition will ultimately rest not just on capital and construction, but on the ability of local authorities and BINL to navigate Nigeria's complex crude supply and off-take dynamics, which would likely constitute a major project bankability hurdle.
Meanwhile, the recently approved directive by President Bola Ahmed Tinubu imposing a 15% ad-valorem import duty on Premium Motor Spirit (PMS) could provide a tailwind for this investment. The tariff aims to curb the importation of fuel and support domestic refining, by creating a more level and competitive playing field for local and modular refineries. Although this tariff potentially improves the bankability of the project for BINL and other prospective investors, it will also test the capacity of Nigeria's local refiners to ramp up production quickly enough to fill the supply gap without fuelling inflationary pressure at the pump.
The big question now is, can BINL and its partners translate these bold funding commitments into real industrial transformation, one that genuinely reshapes Ondo State's economy and strengthens Nigeria's energy independence?
To view original Tope Adebayo article, please click here.
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