Dangote Secures $4.25 Billion for Nigeria Oil Refinery
Stock Chart for Dangote Cement PLC (DANGCEM)
Aliko Dangote, Africa’s wealthiest man, says he has negotiated loans of $4.25 billion from banks to build a refinery to help the continent’s largest crude oil producer reduce gasoline imports.
Refining “is an excellent business to get into,” Dangote said yesterday in an interview with Bloomberg TV’s Ryan Chilcote in Cape Town, where he was attending a business forum. “We have already secured $4.25 billion -- two offshore banks and the rest are Nigerian banks.”
Nigeria, a member of the Organization of the Petroleum Exporting Countries, imports about 70 percent of the oil products it needs to meet domestic requirements. The nation’s four refineries process less than the 445,000 barrels a day of capacity because of aging infrastructure and poor maintenance. The country exports about four times that volume in crude oil.
“Moving into the oil refinery business is smart as there is a clear need for investments in this sector to help the country achieve its GDP growth potential,” Andy Gboka, an analyst at investment bank Exotix Ltd., said by phone from London today. “The country relies on imports for its own oil consumption while the country is an oil producer. This is something which is quite weird if you’re to look on a world-wide basis.”
Dangote is Africa’s richest person, with an estimated wealth of $20 billion, and the 34th wealthiest person globally, on the Bloomberg Billionaires’ Index. Dangote controls Dangote Cement Plc (DANGCEM), Africa’s largest producer of the building material, through Dangote Group.
The refinery would be located in the southwest of Africa’s most populous nation and would be able to process 400,000 barrels of crude a day, Sani Dangote, vice president of the Dangote Group, said in an interview on April 17.
Dangote Cement will probably list shares in London in the fourth quarter of 2014 or first three months of 2015, Dangote said. The share sale would dilute Dangote Industries Ltd.’s ownership in Dangote Cement to about 70 percent to 75 percent, he said. Dangote Industries is controlled by Aliko Dangote.
“The company doesn’t need money,” Dangote said. “There is quite a lot we would leave on the table” if the shares were sold today, he said.
Dangote Cement is the biggest company by market value in Nigeria. It closed trade yesterday at 175.06 naira in Lagos, giving it a market value of 2,983 billion naira ($18.9 billion). The stock has gained 37 percent this year.
The company plans to boost cement production to about 65 million metric tons to 70 million tons annually by 2015 from about 20 million tons now, he said. Operations will start in Cameroon, Zambia and South Africa in 2014, and in the Democratic Republic of Congo in 2015, Chief Executive Officer Devakumar Edwin said on April 25.
Dangote Cement will boost its total annual output to 55 million tons by 2015 based on its visible projects in Africa, Edwin said April 25.
“I think 65 to 70 million tons is a bit optimistic,” said Gboka. “You also have countries like South Africa, Ethiopia and Tanzania where Dangote doesn’t really talk about the competition on the ground and you can be sure in these countries you have strong competitors which are also strengthening their production capacity.”
A new plant in Senegal was unable to start production as scheduled in the first quarter because of a dispute over the land title, Dangote Cement said last week. The company said it’s working on an “acceptable solution” to the dispute that would allow the site to begin operations within weeks.
Dangote said he will announce an additional $350 million investment in Zambia today, raising the investment in a cement plant there to about $750 million. The plant will produce about 1.5 million tons a year.
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