Having made a fortune as a commodities brand, involved mainly in the production of flour,salt,pasta and cement; Dangote Group is planning to broaden its business tentacles into the murky waters of Oil and Gas.
Aliko Dangote, Founder and CEO of The Dangote Group recently announced plans to launch Nigeria’s first private crude oil refinery by 2019. He also announced plans to almost double his cement production on the continent by adding plants in eight countries as he shrugs off a regional economic downturn.
Until recently, Nigeria was Africa’s biggest crude oil producer but it imports 80 percent of its fuel because poor maintenance means its four refineries never reach full output. Its current daily consumption is 260,000 barrels, according to the International Energy Agency.
Dangote told Reuters the $12 billion refinery under construction would have a capacity of 650,000 barrels a day, which will be a tremendous boost bearing in mind the current economic travails of the country. Dangote said the plant, which will include a $2 billion fertilizer unit, was being funded through “loans, export credit agencies and our own equity”.
Some $3.25 billion had come from local and foreign banks, while the central bank had also chipped in. The IFC, the private sector arm of the World Bank, has lent $150 million. Dangote also has plans for a gas pipeline through West Africa. Nigeria has the world’s ninth largest proven gas reserves, at 187 trillion cubic feet (tcf), but loses half of it to flaring and re-injection.
Despite his new focus on oil and gas, the business mogul said he planned to build cement plants in Cameroon, Ethiopia, Kenya, Mali, Niger, Nigeria, Senegal and Zambia by 2018. Another plant will open in Congo Republic by September, he added. A cement plant in Ivory Coast would triple output to 3 million tonnes, up from an initial target of 1 million,while two new plants in Nigeria would add 6 million tonnes annually.
Speaking on the recent impact of the Central Banks new Forex policy:
“We have been badly affected like any other company;When you are talking about 20 billion dollars worth of projects, what is 161 million? One-hundred-and-sixty-one million dollars is my six weeks’ need,” he said.
The Dangote Group sugar refinery in Nigeria had reduced capacity by 15 percent as a result of the dollar crisis. “We ended up owing a lot of dollars,” he said.
“This devaluation alone, we have lost over 50 billion naira ($176 million);The gas, which is our main source of power, is priced in dollars. If there is 40 percent devaluation, your price will go up by 40 percent. Every single aspect of the production will go up by that percentage,” he said.
Dangote also said he was eyeing a listing on the London stock exchange “within the next year or two”.