Nigeria’s Dangote Refinery is set to pursue a dual listing on both the London Stock Exchange (LSE) and the Nigerian Stock Exchange (NSE). This strategic decision was announced by a senior executive of the company on Tuesday.

Aliko Dangote, the Chairman of the Dangote Group, confirmed the plans, indicating that the company might be listed on the NSE by the end of the year.

Dangote elaborated on the reasoning behind the dual listing, stating, “We have listed all our businesses. The NSE (Nigerian Stock Exchange) will not have adequate depth to handle exclusively the petroleum refinery. We would have to take it to LSE (London Stock Exchange) but also list in NSE.”

This strategy aims to tap into the broader and more liquid international market provided by the LSE while maintaining a strong domestic presence.

The Dangote Refinery, which is Africa’s largest, is situated on a peninsula on the outskirts of Lagos, Nigeria’s commercial capital. Built at a cost of $20 billion after several delays, the refinery has the capacity to refine up to 650,000 barrels per day (bpd). Once it reaches full capacity, it will be the largest refinery in both Africa and Europe.

However, securing crude oil supplies has been a critical focus for the refinery. Recently, the Dangote Refinery secured a deal with oil major TotalEnergies for the supply of crude oil. Despite Nigeria being Africa’s largest oil producer, the refinery has had to import oil from the United States to meet its needs. This arrangement aims to stabilize supply chains and ensure consistent operations.

The refinery is set to commence the production of Premium Motor Spirit (PMS) next month, earlier than the fourth-quarter commencement predicted by analysts from Standard and Poor’s (S&P). Previously, the refinery faced delays and only began the distribution of diesel and aviation fuel nearly eight months after its commissioning in May last year.

The Economic Impact

The successful operation of the Dangote Refinery is expected to significantly reduce energy importation costs not only in Nigeria but across West Africa. Furthermore, it is anticipated to impact global markets by reducing gasoline imports into Africa, potentially leading to the closure of some refineries in Europe that currently export gasoline to the continent. This shift could significantly reduce the $17 billion expenditure on gasoline imports in Africa.

Devakumar Edwin, an executive at Dangote Refinery, emphasized the need for a dual listing, stating that the NSE alone would not be capable of handling the refinery’s financial and operational scale. Hence, the inclusion of the LSE will cater to a broader investor base and provide the necessary financial support for the refinery’s expansive operations.

Financial Experts Highlight Potential Outcomes of Dual Listing for Dangote Refinery

Financial experts are optimistic about the potential benefits of a dual listing for Dangote Refinery on both the NSE and the LSE. This strategic move is anticipated to unlock significant advantages for the company and the broader Nigerian market.

Enhanced Capital Access

A dual listing, they say, could substantially enhance Dangote Refinery’s access to capital. The LSE, being one of the most liquid stock exchanges globally, offers access to a vast pool of international investors who may not currently invest in the Nigerian market.

This increased capital access is said to be crucial for funding future expansions, improving infrastructure, and achieving operational efficiencies. By tapping into this broader investor base, analysts believe that Dangote Refinery can secure the necessary funds to support its growth and technological advancements.

Increased Liquidity

Listing on both the NSE and LSE is also expected to improve the liquidity of Dangote Refinery’s shares. Enhanced liquidity means that shares can be bought and sold more easily, reducing volatility and providing a more stable investment environment for shareholders.

This increased liquidity ensures that the company can attract a diverse range of investors, contributing to a more dynamic and resilient market for its shares.

Enhanced Visibility and Credibility

Furthermore, being listed on the LSE is expected to significantly boost Dangote Refinery’s visibility and credibility on the global stage. This is because a listing on the LSE signals adherence to international best practices in governance and financial reporting, which can attract more institutional investors and potentially lead to more favorable credit terms.

Financial experts believe this enhanced visibility and credibility are vital for establishing Dangote Refinery as a reputable player in the global market.

Diversification of Investor Base

They also note that a dual listing will also diversify Dangote Refinery’s investor base, reducing reliance on any single market. By broadening its shareholder base, Dangote Refinery can mitigate risks associated with economic and political instability in Nigeria, they noted.

This diversified investor base will make it easier to raise funds in the future, ensuring greater financial stability and flexibility for the company.

Positive Impact on Local Market

Also, among other things, analysts believe listing on the LSE could have positive spillover effects on the Nigerian Stock Exchange. They note that international attention drawn to Dangote Refinery through an LSE listing might attract more global investors to the Nigerian market.

This influx of international capital could boost overall market confidence and potentially lead to increased investments in other Nigerian companies, thereby strengthening the local market and contributing to its growth.

These factors collectively contribute to the company’s long-term growth and stability, positioning it as a formidable player on both the national and international stages.

In addition to the refinery, Dangote has major interests in other listed companies on the Nigerian Stock Exchange, including Dangote Cement, Dangote Flour Mills, and Dangote Sugar. These businesses collectively represent significant components of Nigeria’s industrial and economic landscape.

Amid an unabating economic downturn, the Minister of Finance and Coordinating Minister of the Economy, Mr. Wale Edun, has announced that Nigeria’s economy is showing signs of growth, with a Gross Domestic Product (GDP) growth rate of 2.98% in the first quarter of 2024.

This announcement was made during the presentation of his ministry’s performance, one year into President Bola Tinubu’s administration in Abuja on Tuesday.

Edun highlighted the marginal growth in the agricultural sector, which is critical to the economy.

“This growth in agriculture provides the monetary authority with the leverage needed to stabilize foreign exchange (FX) rates,” he said.

“By continuing on this path and intensifying our efforts, we are on track to lift many Nigerians out of poverty.”

He added that the progress in agriculture is expected to play a significant role in combating inflation, particularly through a favorable wet season harvest that should stabilize food prices.

Debt Servicing and Financial Health

The finance minister also emphasized that the government now has enough resources to service its debt without resorting to borrowing through Ways and Means, particularly for international debt service.

“What that means is that the government can now pay its way. The government is paying its debt service without resulting in Ways and Means, particularly international debt service,” Edun stated.

He acknowledged that while the government is not in the most comfortable financial situation, it has implemented a process to ensure that funds previously held by parastatals and agencies are now being brought into the national coffers. This has enabled the government to meet its domestic and international obligations.

Investment in the Oil and Gas Sector

According to the minister, the oil and gas sector has received approximately $7 billion in investment pledges due to new incentive frameworks introduced by Tinubu’s administration. These investments had been dormant for years, awaiting appropriate economic conditions for inflow.

“We expect $7 billion worth of investment that have been sitting on the sideline to now come in. Similarly in other sectors,” he said.

Edun noted that Tinubu’s initiatives in the energy sector have mobilized these investments, emphasizing that the policies are fostering prosperity and generating jobs. He highlighted the CNG-fueled conversion programs as part of the administration’s policy framework to drive growth.

“The pivot to CNG is a government policy not just for vehicles but for generators. They have to be either CNG-fueled, solar-based, or electric vehicles. That is the new incentive structure,” Edun explained.

However, economic realities in Nigeria have largely belied the minister’s assertions. Earlier in March, President Bola Tinubu signed new executive orders aimed at enhancing the investment environment and establishing Nigeria as the top choice for investments in the oil and gas industry across Africa.

This policy directive followed extensive engagements with major stakeholders in the sector and focused on optimizing the contracting process to decrease the cycle time to six months.

Despite these reforms, Nigeria’s oil and gas industry, like other sectors, has suffered from insufficient capital investments due to factors such as insecurity, oil theft, and policy inconsistency. For instance, the CEO of TotalEnergies, Patrick Pouyanne, stated that the company decided to invest $6 billion in energy projects in Angola over Nigeria. Pouyanne noted that TotalEnergies had not conducted oil exploration in the oil-rich Niger Delta region for 12 years.

Additionally, Shell Petroleum Development Company of Nigeria Limited (SPDC) and other International Oil Companies (IOC) are reshaping their portfolios, as producing oil in the Niger Delta does not align with their health, security, and environmental policies.

Economic Outlook

However, Edun expressed confidence that continuing on the current policy path would result in an expanding economy and enhanced living standards for Nigerians.

He stated, “We have room to feel that continuing on these paths, redoubling our efforts, following Mr President’s agenda, at the state level and federal level, will lead us to a growing economy that takes us out of poverty and produces a better life for Nigerians.”

Criticism and Public Sentiment

Despite attempts to project an optimistic future, the Nigerian government has faced criticism from various quarters. Many Nigerians have expressed concerns that the government is not adequately addressing more pressing issues such as poverty, unemployment, and insecurity. Critics argue that while policy reforms and investments are crucial, there is a need for immediate and tangible improvements in the living conditions of ordinary Nigerians.

Many believe that the finance minister’s presentation while highlighting the positive strides made, belies the nation’s current challenges.