An oil refinery being built by Aliko Dangote will account for half of his conglomerate’s assets when it is finished next year, a senior executive told Reuters, underscoring the scale of the bet being made by Africa’s richest man on Nigerian oil and gas.
Dangote has built his fortune on cement, although his sprawling business empire also spans flour milling, agriculture and real estate. Now he is building the world’s largest single oil refinery and also expanding into fertiliser, aiming to address long-standing problems in Nigeria’s energy markets.
Though Africa’s biggest crude oil producer, Nigeria imports almost all of its gasoline due to poor maintenance of its four state-owned refineries. Dangote hopes to meet the fuel needs of Africa’s most populous nation, where poor power supply forces families and businesses to rely on diesel-powered generators.
Dangote Group Executive Director Devakumar Edwin said the $10 billion refinery should be completed by December 2019.
“As of today, cement is the biggest part of the group but by 2020, the refinery will be the biggest by assets,” he said.
Dangote Cement, which is Nigeria’s biggest listed company, has attracted investment from Dubai and South African sovereign funds. It posted a 2017 profit of N289.6 billion, up 60 percent on 2016, and is valued at $4 billion.
Edwin said the oil refinery, with capacity to produce 650,000 tonnes, would also target export markets.
“Our primary focus is Nigeria, to meet the entire local demand, but we have the capacity to export more than 50 percent of what we produce, so the secondary focus will be on western Africa and central Africa,” he said.
Edwin said the company had held talks with firms including Vitol and Shell over the supply of crude and lifting of petroleum products for sale abroad.
The Dangote refinery will be able to process different grades of crude including shale oil.
The company is borrowing $3.3 billion for the project, arranged by Standard Chartered Bank. The remainder will be funded by equity and through export agencies, Edwin said.
Dangote has also acquired two oil fields in Nigeria from Shell to help supply the refinery.
Edwin said the first phase of the 1.5 million tonne capacity fertiliser plant, on the same Lagos state site, would be completed in September and start operating in December.
The second line, also 1.5 million tonnes, will start four months later, he added.
The refinery and petrochemical complex located on 25,000 hectares of swampy land includes a jetty to ferry products by sea within Nigeria and abroad and an undersea pipeline to transport gas.
Dangote will consider listing the oil refinery once it comes onstream, Edwin added.
He said that would follow a planned listing of the cement company in London next year after elections in Nigeria. That listing has been mooted for a number of years.
Plans have been delayed to enable the company to meet requirements for the listing, which Edwin said had been completed. He said the listing could help it fund acquisitions overseas.