Nigeria’s Dangote signs deal to build oil refinery

Aliko Dangote, widely considered the wealthiest man in Africa, has signed a multi-billion dollar deal with a number of banks to help finance the building of an oil refinery in Nigeria. The refinery would be the largest on the continent, and, Dangote claims, something of a game changer, turning Nigeria into a petroleum exporter. Although Nigeria is Africa’s largest oil producer, it lacks any considerable refining capacity and relies on importing most of its fuel.

Dangote, who is worth nearly $16 billion and has topped the Forbes list of Africa’s richest men for the past three years, claimed the refinery would create thousands of jobs. The inhabitants of the southern Niger Delta region, Nigeria’s main oil-producing province, are among the poorest in the country. They have long accused the government and oil companies of failing to develop the area. Previous efforts to repair Nigeria’s run-down refineries and build new ones have been undone to protect the interests of powerful fuel importers, some of whom have been linked to a subsidy scam costing the country billions of dollars a year, the BBC reported. Last year an investigation revealed that in two years, more than $6 billion was lost in a fuel subsidy scam.

It is hoped the refinery, which will be built in the south-west, will be operation sometime in 2016, Dagote said. The businessman, who made his fortune in cement, flour and sugar, signed a $3.3 billion loan deal with local and foreign bank to build the refinery, as well as fertiliser and petrochemical plants. The entire venture will cost $9 billion, which consists of $3 billion in equity from Dangote Industries and $6 billion to be raised in loan capital, according to BBC News.

The initial loan facility was co-ordinated globally by Standard Chartered and in Nigeria by Guaranty Trust Bank, London’s Financial Times newspaper reports.

Nigeria currently imports more than three-quarters of its fuel despite being the continent’s biggest producer. The West African state is often hit by fuel shortages, and conflict over control of its oil wealth. Although it has two refineries in the Port Harcourt area, neither runs at full capacity.

“At least for the first time in our lifetime, we’ll see Nigeria exporting petroleum products. We’ll also see Nigeria for the first time exporting fertiliser rather than using hard-earned foreign exchange to import fertiliser,” Dangote said.

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