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Dangote to raise $750m through bonds for completion of refinery project

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Africa’s richest man, Aliko Dangote, has concluded plans to raise $750 million through bonds to complete the refinery project in the Lekki area of Lagos State.

At least $1.1 billion is required to complete the facility which has been postponed twice in the last four years.

The refinery project was initially scheduled for completion in 2019, but fund-related complication and the COVID-19 pandemic threw a spanner in the work and completion period was pushed forward to 2023.

A company overview by Fitch Ratings, an American credit rating agency, Dangote Industries Limited (DIL), revealed that Dangote planned to raise $750 million from the Nigerian bond market with Dangote Oil Refining Company Limited (DORC) and Dangote Fertiliser Limited (DFL), DIL’s subsidiaries, to be used as co-obligors under the proposed programme.

READ ALSO: How Aliko Dangote’s wealth depicts disappointing state of Nigeria’s business environment

Part of the funds will be disbursed to finance the $1.1 billion extra cost for the completion of the refinery project, while the rest of the capital will be sourced from either asset sale in Dangote Cement or the refinery project itself in a bid to avoid another extension, and complete the refinery project next year.

“If the transaction is not successful, or should completion costs overrun or market conditions in the cement or urea sector deteriorate materially, we do not believe that DIL’s existing creditors would have further lending capacity.

“We believe that further asset sales, either in cement, or stakes in the projects, would be the more likely options to address funding of the refinery,” Fitch said in the report.

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