Dangote Takes a Giant Step, Moves to Begin First Private Refinery

Aliko Dangote is a business mogul of some sort, whose middle name is entrepreneur. He is never dissuaded from entering new businesses despite the general inclement operating business environment. Given his foray into many different business terrains and the successes he has recorded thereof, it would appear he has the uncanny ability to juggle different balls at the same time and get results.
He has been declared the richest black man on the planet earth, yet his humility will enthrall you. He remains unaffected by the lofty heights he has attained in business. His business acumen is unparalleled. Form the humble beginning, Dangote has nurtured a trading company to a pan-African conglomerate and a force to be reckoned with in the global arena using creativity, innovation, style, patience and commitment to his dream.

Earlier Acquired, Relinquished Kaduna Refinery
He made a bold move to acquire the Kaduna refinery in 2007 along with one of his friends in response to the government’s call to help rejuvenate the ailing refinery, which by then had become a drain pipe to the Federal Government. For one reason or the other, Dangote returned the refining plant back to government. Since then he had been on the drawing board deploying his business dexterity on the best way to enter into the critical oil and gas sector.
The global business community would have been shocked last week when it was announced that the business mogul was ready to build in his home country, the biggest petroleum refinery in Africa. This is a feat thought to be unrealisable given that many who had been licensed to build refinery years ago failed woefully to commence business, citing the deregulation policy as a hindrance.

$3 billion Loan Agreement
Those in that school of thought would have then swallowed their pride when Dangote gathered a consortium of both local and international banks in Abuja to sign a term loan agreement to the tune of $3 billion to execute the refining plant project, a fertilizer plant as well as petrochemical industry. Other African financial institutions are also expected to bring some facility while the man himself is coming on board with an amount equaling the total sum being put together by all the banks. The total investment is $9 billion.
This is a giant stride, the facility itself is historic as it remains the largest loan facility to any individual by Nigerian banks. What this says of Dangote is that the banks could vouch for his integrity and honesty of purpose when it comes to business.
And so Dangote, President/Chief Executive of Dangote Group, made an audacious foray into a new territory, petrochemical and oil and gas refinery business. Whatever the myth around the petroleum refinery sub sector of the oil and gas industry, which made other sectorial stakeholders see importation of the petroleum products as making a better investment sense than going into local refining, Dangote has destroyed the claim and removed the veil when he signed the N528 billion term loan with the banks to finance the project.
By this singular act, Dangote has proven once again that he is a value-creating investor in the domestic economy who will risk his money to stimulate Nigeria’s economy as opposed to other investors with undiluted appetite for importation as only business option.
Just as we experienced before now in cement industry, where local demand then far outweighed supply, before Dangote’s intervention investment to meet up with national consumption demand, government has consistently cited fuel importation as a major setback for the economy, therefore at the completion of the refinery and petrochemical, national supply would have been upped by 100 percent. It would then mean that Dangote as a patriotic Nigerian investor have helped in closing the inverse gap created by that national deficiency dwindling local refining capacity supply and more population demand.
Dangote sought the commercial loan to augment his own contribution in the same region as the borrowed facility. It gladdens the heart to know that works had already commenced on the construction of these plants with the fertilizer plant being cited in Edo and the Petrochemical and Petrol refining plants situated at OKNLG Free Trade Zone bordering Ogun and Ondo states.
Dangote revealed that the contract for the refinery and petrochemical plant had been awarded to UOP, a subsidiary of Honeywell International, a Fortune 500 company and US-based conglomerate that specialises in consumer products, engineering services and aerospace systems.
The project manager for the refinery and petrochemical plant is India Engineers Limited, an Indian government-owned company credited with the setting up of refineries in India while the contract for the fertilizer plant had been awarded to oil and gas contractor, Saipem, a subsidiary of Italy’s Eni, which already has a presence in Nigeria.

Refining Plant Has Overall Capacity to Produce 400,000 bpd, Says Dangote
Giving the details of the project regarding the scope of the project and the production capacities of the various plants, Dangote indicated that the Fertilizer Plant is designed with a capacity to produce 2.75 million MTPA of Amonia and Urea; the Refining Plant with overall capacity 400,000 bpd and the Petrochemical Plant to produce Poly Propylene to the tune of 600, 000MTPA
The Refining and Petrochemical Plants, he stated further, would be the largest in Africa and had been designed to produce Euro 5 quality standard as compared to the Euro 3 currently supplied in the Nigerian market. On completion, he said the refined products output would be Gasoline (PMS) of 7.684 million MTPA; Diesel-5.30 million MTPA; Jet Fuel/Kerosene-3.740 million MTPA; LPG-0.213million MTPA; and Slurry/Fuel Oil-0.625million MTPA.
There is no doubt that the projects, which will be the single largest individual investment since the commencement of the democratic government in Nigeria. Dangote said at the agreement signing in Abuja: “This is our contribution to the present government’s economic transformation agenda and it forms part of our expansion initiatives of this Group, which size has in the last five years increased ten-fold to a market capitalization of $22 billion.
“Dangote Group today accounts for over 30% of the total market capitalization of the Nigerian Stock Exchange (NSE). Our massive expansion in the last five years has coincided with the tenure of this administration and have been due mainly to the formulation and implementation of progressive policies of this government like the cement backward integration policy that has seen Nigeria achieve self-sufficiency in cement production.
“It is on record that this administration has helped create and maintain the enabling environment that has encouraged us to invest over $6 billion in the Nigeria cement manufacturing industry in the last seven years.
“We are happy to inform you that we are not resting on our oars as we through this letter want to inform you of our recent decision to make possible what could.”
The Richest Man in Africa expressed happiness that due to the vastly improved investor friendly environment in Nigeria, there was a tremendous response by reputable international finance organisations to participate in the loan syndication.
However, analysts are of the view that apart from the removal of bottleneck created by fuel importation and its attendant corruptive tendencies, the job opportunities would remain unquantifiable as direct and multiplier effect of jobs to be created would engage over 25, 000 people. Thus, poverty will be reduced again and standard of living of many shored up.
Besides, the coming on stream of the projects will eliminate fuel scarcity, kerosene shortage and other problems associated with availability and affordability of petroleum products in the country. It means that the days of long queues at the filling stations for petrol and kerosene are numbered.