The Dangote Refinery and Petrochemicals plant has paid down over 70 percent of the debt acquired to build it as first refined products are set to hit the market by the end of July and early August, government officials say.
Built at the cost of $18.5 billion, it was partly financed by debt from a consortium of local banks led by Access and Zenith and the other half by Dangote’s equity. Loans outstanding has dropped from $9 billion to $2.7 billion, said Godwin Emefiele, governor of the Central Bank of Nigeria (CBN)
Emefiele said that in September 2013, when Dangote announced his plans for a refinery, it was estimated at $9 billion but by 2017, when the Dangote Group commenced this project, it had escalated.
He said that due to an array of several factors, the project was completed at the cost of $18.5 billion with a contribution of 50 percent equity by Dangote and 50 percent debt finance by local banks.
“I am delighted to announce that the commercial loan component was majorly financed by domestic banks with a balance from international banks,” he said.
He said the CBN provided N125 billion to cover domestic currency requirement for the venture while also ensuring that foreign currency was provided to pay for the refinery components.
Aliko Dangote, president of the Dangote Group, said the first batch of products from the 650,000-barrels-per-day refinery will be released into the market from the end of July and early August this year.
In a speech at the refinery commissioning, in Lagos, Dangote said the plant will meet all of Nigeria’s refined products needs as well as meet demand in the African market. The priority, he said, is to help Nigeria curb high petrol subsidies and save foreign exchange spend on product imports from this year.
Dangote said the plan was initially to enter the market with a brownfield refinery but did not succeed and took the bold decision to build a greenfield refinery.
He said: “We have built a refinery with a capacity to process 650,000 barrels per day of crude oil (plus 900,000 tonnes of polypropylene) in a single train – which is the largest in the world. We have selected the best plants and equipment and the latest technologies from across the world.
“Our products slate is designed to meet the highest quality standards of high-value products including Premium Motor Spirit, Automotive Gas Oil (diesel), Aviation Turbine Kerosene; all of Euro V Standards that will enable us not only meet our country’s demand but also to become a key player in the African and global market.
“Our coastal location and offshore loading and offloading (SPM) facilities with a capacity to receive all our crude oil supplies and evacuate up to 75 percent of our liquid products give us direct access to the rest of Africa and the global market for exports. In addition, 80 percent of our production can be discharged through trucks nationwide.”
Dangote said a huge investment of over $18.5 billion in the industry has been prompted by “our desire to support and contribute our quota to the Federal Government’s sustained effort to transform our economy and properly position our country as the leading nation in Africa, and a respected member among emerging economies in the world”.
Africa’s richest man said the commissioning ceremony was just the beginning of a great journey, describing it as “a milestone in a new and exciting trajectory for the downstream sector of Nigeria’s oil and gas industry”.
He said: “It is our firm commitment that we will replicate in this sector what we have achieved in the cement and fertiliser markets, where Nigeria transited from being the largest importer of these products to a net exporter.
“Beyond today’s ceremony, our first goal is to ramp up production of the various products to ensure that within this year, we are able to fully satisfy our nation’s demand for high quality products to enable us to eliminate the tragedy of import dependency and stop, once and for all, the dumping in our market of toxic sub-standard petroleum products. Our first product will be in the market before the end of July this year.
“Beyond this, we intend to ensure that our plants are run at the highest capacity utilisation and highest efficiency to enable us to export competitively to other markets, especially in the ECOWAS and the wider Africa Region in which 53 countries out of 55 are dependent on imports to meet their petroleum products demand. This is a clear opportunity for Nigeria given the African Union’s commitment to the creation of an African Common Market through the recently established African Continental Free Trade Area regime.”
On the immediate benefits of the commissioning, Dangote said beyond the constant availability of high-quality fuels for the transportation sector, the refinery will also make available to industries vital raw materials for a wide range of manufacturers in the plastics, pharmaceutical, food and beverages, packaging, construction, and many other industries.
He said: “While the refinery operation and ancillary businesses will generate massive job opportunities, the downstream value chain will equally provide far more absorptive capacity for labour in hundreds of thousands.
“Once our plant is fully on stream, we expect that at least 40 percent of the capacity will be available for export and this will result in significant Foreign Exchange inflows into the country.
“Overall, we are committed to operating our Plant in line with international best practice. Recognising the importance of protecting the environment, we have adopted stringent environmental, health and safety policies to ensure that the refinery operates in a safe and sustainable manner.”