Aliko Dangote, president, Dangote Group, has revealed plans to quadruple the supply of gas to Nigeria by building pipelines that may be backed by Carlyle Group LP and Blackstone Group LP, the world’s two biggest private-equity firms.
Dangote, who has a net worth of $15 billion, will invest $2.2 billion to $2.5 billion in two sub-sea 550-kilometre (341-mile) pipelines running from the Niger Delta to the commercial hub of Lagos.
The pipelines will increase the amount of gas available in Africa’s biggest economy to four billion standard cubic feet per day from one billion.
While Nigeria has gas reserves of about 180 trillion cubic feet, more than any other African country, most of what’s produced is flared or exported because of a lack of infrastructure to transport it to local companies and households. Boosting domestic supply will help increase electricity generation in a country where power cuts are common and about 70 per cent of electricity plants are fueled by gas, according to Dangote.
“Having an additional three billion scf will sort out all the gas issues we have today in Nigeria,” he said, adding that “it’s badly needed.”
Dangote, who has interests ranging from cement to sugar and oil refineries, plans to start laying the pipelines before the end of the year, he said. The first one should be ready by mid-2017.
The International Finance Corporation (IFC) is considering an investment in the pipelines as are Blackstone and Carlyle, Dangote said.
“We have a lot of companies that are very interested in participating,” Dangote said.
Blackstone and Carlyle said in August they would partner with Dangote Industries Ltd., the holding company for the billionaire’s operations, to invest in sub-Saharan Africa. Blackstone said its Johannesburg-based partner Black Rhino would jointly invest as much as $5 billion with the company on energy and other infrastructure in the region.
The pipelines could be used by oil producers in Nigeria that currently have little incentive to sell gas from their fields in the country, including Royal Dutch Shell Plc and Exxon Mobil Corporation, Dangote said.
“If today they process that gas, there’s no infrastructure to remove it, there’s no pipeline,” he said. “We’re trying to build that infrastructure.”
Nigeria’s economy, which gets 90 per cent of export earnings and two-thirds of government revenue from oil, has been hit by the 40 per cent fall in Brent crude prices since June. The Naira has weakened 18 per cent against the dollar within that period, while the Nigerian Stock Exchange All Share Index is down 20 per cent.
Dangote’s investments in oil and gas include a $9 billion refinery near Lagos, which will be able to process 650,000 barrels a day when completed. The company got a license from the government earlier this year and will export refined fuel to the rest of sub-Saharan Africa as well as sell it locally, Dangote said.
“We will be in the market with our petroleum products by the first quarter of 2018,” he said.

Maureen Nzeogu
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