Wednesday, September 4, 2013

Dangote Signs Deal To Build Oil Refinery In Nigeria

Aliko Dangote
Africa's wealthiest man, Aliko Dangote, has signed a multi-billion dollar deal with banks to finance the building of an oil refinery in Nigeria.

The refinery would be the largest in Africa, turning Nigeria into a petroleum exporter and would create "thousands" of jobs. It would be built in the south-west and would become operational in 2016, he said.

The entire venture would cost $9bn, with $3bn in equity from Dangote Industries and $6bn to be raised in loan capital.

Dangote, told newsmen that the group of banks, comprise Standard Chartered Bank, Standard Bank of South Africa and some local banks, that will provide a greater part of the $3.3 billion.

Giving a breakdown of the cost of the project, he said Dangote group would be bringing in $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 multi billion dollar complex, which will be first of its kind in Nigeria and the largest in Africa.

He said on completion in 2016, the 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 flurry, 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 fertilizer facility will produce 2.75 million metric tonnes of urea and ammonia for the agriculture sector.

Observers believe that with this huge amount expected from the banks and other development partners it is clear sign that these projects are far from myth, because banks don't invest in what they are not sure of.