Dangote to invest $12bn in planned refinery

The President of Dangote Group, Mr. Aliko Dangote on Friday said he plans to spend $12 billion on Nigeria’s first private crude oil refinery billed to commence operation by the first quarter, 2019.

The 650,000 capacity refinery, when completed is expected to curb the continuous fuel shortages in Africa’s most populous country where daily fuel consumption currently stands at 260,000 barrels, according to the International Energy Agency.

Dangote told Reuters that until recently, 80 per cent from Africa’s biggest crude oil producer is being exported as a result of poor maintenance of her four refineries, which, he noted, never reached full output.

He stated that the plant, which will include a $2 billion fertilizer unit, was being funded through loans, export credit agencies and Nigeria’s equity market.

“Some $3.25 billion had come from local and foreign banks, while the Central Bank of Nigeria (CBN) had also chipped in. The IFC, the private sector arm of the World Bank, has lent $150 million.”

Read also: FG plans to inject N350bn to enhance economy

Dangote also has plans for a gas pipeline through West Africa. Although, Nigeria has the world’s ninth largest proven gas reserves, at 187 trillion cubic feet, but loses half of it to flaring and re-injection.

Despite the new focus on oil and gas, the business magnate said he planned to build cement plants in Cameroon, Ethiopia, Kenya, Mali, Niger, Nigeria, Senegal and Zambia by 2018. Another plant will open in Congo Republic by September, he added.

Meanwhile, the collapse in oil prices has hit Nigerian companies hard, with many unable to access dollars due to CBN’s foreign exchange restrictions imposed to add value to the naira.

Dangote said that the $161 million bought during that period from the CBN merely reflected the size of his business and did not represent preferential treatment.

“We have been badly affected like any other company,” he said, arguing that operational costs totaled $100 million each month due to recurring expenses such as the purchase of parts for cement production and running a fleet of 9,000 trucks.

“When you are talking about 20 billion dollars worth of projects, what is 161 million? One-hundred-and-sixty-one million dollars is my six weeks’ need,” he said.

Dangote’s sugar refinery in Nigeria had reduced capacity by 15 percent as a result of the dollar crisis. “We ended up owing a lot of dollars,” he said.

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