How Dangote Plans to Finance Refinery, Petrochemical Project

Dangote Industries Limited (DIL) is set to sign a $3.3 billion
termloan 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 Nigeriaand 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 othercountries
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.