In a bid to diversify his business empire, Dangote acquired the Kaduna refinery in 2007. However, according to some critics, due process was not followed in the procurement of the refinery, as such, the refinery was returned to the government. Six years down the line, Dangote Group has announced the readiness of the business mogul to build a refinery in Nigeria. The refinery project, with a total investment cost of $9 billion, will be the biggest petroleum refinery in Africa.
Going against the odds, Dangote gathered a consortium of local and international banks in Abuja to sign a term loan agreement to the tune of $3 billion to execute the refining plant project, a fertilizer plant as well as petrochemical facilities. In the past, a number of investors, who were given license to build refinery failed to carry out the project, blaming their inability on unfriendly policies within the sector. Other African financial institutions are also expected to bring some facility while the man himself is coming on board with an amount equaling the sum being put together by all the banks. The total investment is $9 billion.
The loan facility, which remains the largest loan offered to an individual by banks in Nigeria, shows that banks hold the President/Chief Executive of Dangote Group in high esteem for his integrity and honesty of purpose when it comes to buisness.
Prior to his involvement in the cement industry, local demand for cement was higher than supply, thus creating a deficit in the market and an increase in the local price of cement. In a similar trend, it is expected that at the completion of the refinery, National supply of pertroleum product would increase by a 100 per cent, thus reducing the pain of the average Nigerian and closing the gap in the import/export of petroleum products.
The project will include a fertilizer plant, a petrochemical and petrol refining plant. The fertilizer plant will be located in Edo and the petrochemical and petrol refining plants will be sited at OKNLG Free Trade Zone bordering Ogun and Ondo states.
According to Vanguard Newspaper, Dangote has awarded the refinery and petrochemical plant to UOP, a subsidiary of Honeywell International a Fortune 500 company and US-based conglomerate that specializes in consumer products, engineering services and aerospace systems; while India Engineering Limited, an Indian government-owned company, has been awarded therole of project manager for the refinery and petrochemical plant. Saipen, a subsidiary of Italy's Eni, has been awarded the contract for the fertilizer plant.
According to the Dangote Group, the fertilizer plant is designed with a capacity to produce 2.75 million MTPA of amonia and urea; the refining plant with overall capacity 400,000 bpd and the petrochemical plant to produce poly propylene to the tune of 600, 000MTPA.
The Chairman of the Group, Aliko Dangote, further stated that despite being the largest in Africa, the refinery will produce Euro 5 quality as compared to the Euro 3 currently sold in Nigeria. On completion, he stated the refined products output would be gasoline (PMS) of 7.684 million MTPA; diesel-5.30 million MTPA; jet fuel/kerosene-3.740 million MTPA; LPG-0.213million MTPA; and slurry/fuel oil-0.625million MTPA.
There is no doubt that the projects is the single largest individual investment since the commencement of the democratic government in Nigeria. Said Dangote at the agreement signing in Abuja: “This is our contribution to the present government’s economic transformation agenda and it forms part of our expansion initiatives of our Group which size has, in the last five years, increased ten-fold to a market capitalization of $22 billion.
Dangote Group today accounts for over 30% of the total market capitalization of the Nigerian Stock Exchange (NSE). Our massive expansion, in the last five years, has coincided with the tenure of this administration and has been due mainly to the formulation and implementation of progressive policies of this government like the cement backward integration policy that has seen Nigeria achieve self-sufficiency in cement production.
“It is on record that this administration has helped create and maintain the enabling environment that has encouraged us to invest over $6 billion in the Nigeria cement manufacturing industry in the last seven years.
“We are happy to inform you that we are not resting on our oars as we through this letter want to inform you of our recent decision to make possible what could.”
Experts and observers have commended the investment; pointing to the fact that the job opportunities would remain unquantifiable as direct and multiplier effect of jobs to be created would engage over 25, 000 people. In effect, the standard of living will be improved upon.
According to some concerned Ngerians, the project will eradicate the ever occuring fuel scarcity in the country and a rduction in the cost of fuel price.