Business
Dangote group seeks $3.3 billion in financing to build $9 billion refinery
Aliko Dangote – founder and CEO of the Dangote Group
(Reuters) – The Dangote Group said on Tuesday it will borrow US$3.3 billion to build a US$9 billion oil refinery and petrochemical complex in Nigeria, Africa’s top oil producer and second largest economy.
The Dangote group, with interests ranging from cement to basic food processing to oil and gas, also said it was seeking a further US$2.25 billion from development funds for the project, into which it would put US$3.5 billion of its own equity.
Aliko Dangote, who happens to the world’s richest black man, divulged plans for the refinery in April.
The Dangote Group makes up 30 percent of Nigeria’s bourse.
Dangote told reporters then that the refinery would have a capacity of around 400,000 barrels a day by late 2016, almost doubling Nigeria’s refining capacity.
“We are not resting on our oars,” group spokesman Anthony Chiejina said, adding that the complex, including petrochemical and fertilizer plants, “could be the single largest contribution to this government’s economic transformation agenda”.
Nigeria now has the capacity to produce some 445,000 barrels per day among four refineries, however, they operate well below that.
The lack of refining capacity is among the major brakes on Africa’s second biggest economy. Sorting it out would boost growth and save on fuel import bills.
But it would be bad news for European refiners and oil traders who make huge profits bringing in the gasoline.
Past efforts to build refineries have been delayed or cancelled, but analysts say Dangote should be able to build a profitable Nigerian refinery owing to his past successes in industry and his strong business connections.
Dangote insists the refinery will be profitable, although industry experts say that would only be the case if the government guarantees crude supplies at well below the market rate – or subsidizes his end-product.