Africa’s richest person and founder of the Dangote Group, Aliko Dangote, announced on Monday that he has paid off approximately $2.4 billion of the $5.5 billion borrowed to build his $19 billion refinery located near Lagos.
This disclosure was made during the Afreximbank Annual Meetings (AAN) and the AfriCaribbean Trade & Investment Forum.
The 650,000 barrels-per-day capacity refinery, which is one of the largest in the world, faced significant hurdles during its development. Dangote revealed that both local and foreign entities made concerted efforts to sabotage the project, with many skeptics believing it was destined to fail. He credited the support of Afreximbank and Nigeria’s Access Bank for keeping the vision alive. Without these financial institutions, Dangote asserted, the refinery project might have collapsed.
Highlighting the crucial role of African financial institutions, Dangote said that organizations like the African Finance Corporation (AFC) and Afreximbank understand the unique challenges of the continent. He criticized foreign banks for their lack of interest in Africa’s growth, noting that some even attempted to push his company into loan default during the COVID-19 pandemic.
“We borrowed the money based on our own balance sheet. I think we borrowed just over $5.5 billion. But we paid also a lot of interest as we went along, because the project was delayed due to lack of land and the time-consuming sand-filling process. Almost five years or so we didn’t do anything,” Dangote explained.
He noted that since beginning actual construction in 2018, they have managed to pay off about $2.4 billion in principal and interest, leaving approximately $2.7 billion remaining.
Challenges with International Oil Companies
Addressing whether he was receiving enough crude oil as feedstock for the refinery from International Oil Companies (IOCs), Dangote acknowledged resistance from entities accustomed to significant profits over the past 35 years. He suggested that these entities would naturally resist changes that threatened their revenue streams.
“In a system where for 35 years people are used to counting good money, and all of a sudden they see that the days of counting that money have come to an end, you don’t expect them to pray for you. Of course, you expect them to fight back. And I think that is the process that we’re now really going through,” he stated.
Dangote expressed confidence that despite the current non-supply of crude and non-purchase of products, these issues would be temporary.
Dangote described the extent of opposition he faced as unexpectedly severe. “I knew that there would be a fight. But I didn’t know that the mafia in oil, they are stronger than the mafia in drugs. I can tell you that. Yes, it’s a fact,” he said, noting the numerous attempts by both local and foreign entities to derail the refinery project.
He said he remained resolute against all odds, describing himself as someone who has fought all his life and expressing confidence in ultimately winning this battle.
Dangote stressed the importance of Africa producing what it consumes, pointing out that there is currently no support coming from Western countries. He revealed that during the COVID-19 period, some international banks actively sought to push his company into loan default to kill the project, a move thwarted by support from banks like Afreximbank.
Future Export Plans
The entrepreneur also highlighted the potential of the Dangote fertilizer plant, which currently exports 25% of its production to the US and can fully meet the urea needs of Caribbean countries. He pointed out that Nigeria lacks strategic oil reserves, a situation he described as dangerous.
However, he said that with the Dangote refinery, the country can now establish a strategic reserve of petroleum products.
“So, we are not living from hand to mouth anymore. And the country doesn’t have strategic reserves in terms of petrol, which is very dangerous. It is. But in our own plant now, we have only 4.78 billion liters of various tankage capacity. But right now we’re adding another 600 million,” Dangote explained, adding that the refinery will produce and export top-quality products, addressing the issue of previously imported dirty fuels that had health implications like cancer.
Emphasizing the role of domestic investment, Dangote urged Africans not to be deceived into thinking that foreign investors will make the continent great.
“It must be the domestic investors. Because domestic investment is what actually attracts foreign investment,” he noted.
Power Generation and Plan to Venture into Steel
Looking ahead, Dangote stated that the Dangote Group targets revenue in excess of $30 billion and plans to venture into the steel industry soon.
“We want to make sure every single steel that we use will come from Nigeria,” he said.
Dangote also mentioned that the Dangote Group currently produces about 1,500 megawatts of power for self-consumption, thereby reducing dependence on the national grid and mitigating its impact on the broader energy infrastructure.
Dangote’s journey to build one of the largest refineries in the world has been fraught with challenges, but as the refinery nears full operation, it promises to significantly boost Nigeria’s refining capacity, enhance energy security, and provide substantial economic benefits to the country and the broader region.
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