Dangote to borrow N475bn to finance new refinery project

The company plans to complete the refinery by 2016.

The Dangote Group said on Tuesday that it plans to borrow about $3.3 billion (about N475 billion) to finance the construction of a $9 billion oil refinery and petrochemical complex in Nigeria.

The group, whose business interests range from cement manufacturing to basic food processing and oil and gas, also said it was seeking a further $2.25 billion from development funds for the project, into which it would inject a further $3.5 billion of its own equity.

Reuters gathered that the loan would be signed with financiers on September 4 as part of efforts to push for the realization of the refinery project, which the Chairman of the group, Aliko Dangote, said would take off since April.

The Dangote Group accounts for up to 30 per cent of Nigeria’s stock market capacity. The refinery would have a capacity of around 400,000 barrels per day by late 2016, almost doubling Nigeria’s current refining capacity.

“We are not resting on our oars,” Group spokesman, Anthony Chiejina was quoted by Reuters as saying, 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 combined capacity to produce some 445,000 barrels per day from four refineries located in Warri, Port Harcourt and Kaduna, though they are currently operating below installed capacity due to decades of mismanagement and corruption.

A major factor that has limited the interest in private refineries is the subsidization of petrol by the federal government, although analysts believe Dangote’s decision to venture into refining means the company, based on its other business successes, is prepared for a profitable venture.