Dangote’s plans for financing refinery, petrochemical project

aliko_dangoteDangote Industries Limited (DIL) is set to sign a $3.3 billion term loan agreement with a consortium of local and foreign banks on September 4 in Abuja for the construction of a 400,000 barrels per day (b/d) refinery, petrochemical and fertiliser complex that will cost the Nigerian conglomerate $9.05 billion to construct.

Confirming this Tuesday, Chairman of DIL, Alhaji Aliko Dangote, informed THISDAY that the signing of the syndicated facility would be done with a group of banks comprising Standard Chartered Bank, Standard Bank of South Africa and local commercial banks. He said most of the $3.3 billion would be provided by Nigerian banks.

Giving a breakdown of the cost of the project, he said DIL would be bringing $3.5 billion as its equity contribution, the banks – $3.3 billion, while export credit agencies and development finance institutions would provide $2.25 billion to construct the multibillion dollar complex, which will be first of its kind in Nigeria and the largest in Africa.

He said on completion in 2016, the 400,000b/d refinery would produce the equivalent of 20 million metric tonnes of petroleum products comprising gasoline (commonly known as petrol), diesel, aviation fuel/kerosene, some fuel oil and heavy distillates such as flury, which he explained is a raw material for carbon black that can be used for the production of tyres.
The petrochemical plant will produce polypropylene for industries while the fertiliser facility will produce 2.75 million metric tonnes of urea and ammonia for the agriculture sector.

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, he said.

He added that the contract for the fertiliser plant had been awarded to oil and gas contractor, Saipem, a subsidiary of Italy’s Eni, which already has a presence in Nigeria.

He said DIL was in the process of getting the refinery licence for the project that would be located in the Olokola LNG (OKLNG) Free Trade Zone in Ogun and Ondo States.

On concerns that the subsidy regime in the Nigerian economy might hamper his investment in a refining plant, Dangote said petroleum products produced from the facility would be sold at the same price as other refineries worldwide.
“We have no intention of selling our products at subsidised prices; after all, when NNPC and oil marketers import petroleum products they do not go and procure at a subsidised price.

“They buy at the going rate and import it into the country, then sell at below cost. That is why the government makes up the differences. So we will be selling our products like any other refinery to oil marketers in domestic and sub-Saharan African markets. They in turn can collect the subsidy from government,” Dangote said.

He explained that the refinery/petrochemical/fertiliser complex would provide value added services to the Nigerian economy and create thousands of jobs that are currently being exported to other countries because of the fuel importation regime.

“This is an opportunity to create value and is another way of diversifying our economic base, as we move to counter the threat posed by massive discoveries of shale oil in the US and other parts of the world,” he said.

 

Information from This Day was used in this report.

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