Nigerian billionaire Aliko Dangote has disclosed that he has already paid about $2.4 billion of a $5.5 billion loan he secured to finance the development of his $19 billion oil refinery.
The 650,000 barrels per day refinery, which is one of the largest in the world, is the size of about 4,000 football fields and commenced operations in May 2023 after an eight-year construction period.
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How did Aliko Dangote finance his refinery?
Speaking during the Trade and Investment Forum in Nassau, the Bahamas, the business mogul revealed that the project was financed through loans from African banks.
He said he leveraged the strong financial standing of his company to get the loans instead of resorting to international project financing.
The business mogul humorously remarked that international lenders often have stringent requirements that would have made borrowing from them rather burdensome.
“When we were building the refinery, we knew that if we had gone with the idea of project financing, the international banks would have shut it down. They might have asked me for my great-grandmother’s certificate of birth which I don’t think I will be able to find anyway. What we did was to borrow the money based on our own balance sheet. At that time, Naira was very strong,”
the business mogul said.
Challenges and setbacks
Dangote went on to say that he borrowed $5.5 billion, which accrued interest over time largely due to delays in the refinery’s construction.
“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 because of a lack of land, also the sand-filling took a long time. Almost five years or so we didn’t do anything,” Dangote said.
He noted that they had since managed to pay about $2.4 billion of the $5.5 billion loan.
“We’ve actually paid back interest and some principal about $2.4 billion. We’ve done very well. We now have only about $2.7 billion left to be paid. We’ve done very well for a project of that magnitude,” the tycoon noted.
However, the billionaire disclosed that the project has not been without its setbacks. He acknowledged facing resistance, especially from international oil companies that were expected to supply crude oil as feedstock for his refinery.
“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,” he said.
Further, Dangote opened up on attempts, albeit futile, by local and international entities to sabotage the refinery’s construction.
“Well, I knew that there would be a fight. But I didn’t know that the mafia in oil is stronger than the mafia in drugs. I can tell you that. Yes, it’s a fact,” he mentioned.
Going forward, Dangote said his refinery would serve as Nigeria’s strategic petroleum reserve, a facility the West African country currently lacks.
“The country doesn’t have strategic reserves in terms of petrol, which is very dangerous. But in our plant, when you came, we had only 4.78 billion litres of various tankage capacity. But right now we’re adding another 600 million,” he remarked.
This move will effectively ensure that Dangote refineries provides Nigeria with the much needed strategic reserves of petroleum products.
In terms of revenue, Dangote is targeting figures exceeding $30 billion.
Expanding into the steel industry
Furthermore, he expressed his intent to expand his industrial portfolio by venturing into the steel industry and emphasized the importance of African nations being self-reliant and self-sustaining.
“We want to make sure every single piece of steel that we use comes from Nigeria,’’ he said. “What I keep telling people is that, look, we as Africans, please don’t be deceived; no foreigner can come and make your continent great. It must be domestic investors because domestic investment is what actually attracts foreign investment.”
The billionaire’s venture into the steel sector is anticipated to significantly enhance Nigeria’s steel production capabilities, thereby reducing the country’s dependency on imports and promoting economic self-sufficiency.
