Aliko Dangote, president, Dangote Industries Limited, and Africa’s richest businessman, announced recently his plans to increase the size of his investment in an oil refinery, petrochemical and fertiliser plant in Nigeria by more than a fifth to $11billion despite a looming slowdown in Africa’s biggest economy.
Speaking during an interview, he said the refinery and petrochemicals project should be completed by the end of 2017.
Dangote who said, “Nigeria needs it and Africa needs it,” plans to use the project to revolutionise Nigeria’s energy sector by slashing fuel imports, eliminating costly rackets associated with subsidies and crude oil swaps, and adding billions of dollars in value to petroleum exports.
The Dangote Group, had already begun laying foundations outside Lagos, the commercial capital, and had raised nearly two-thirds of the initial foreign currency requirement needed before the naira began to slide on weaker world oil prices.
“The devaluation will increase our dollar costs. But most people in the oil business have slowed down or suspended projects. So I think we will get very good deals in terms of building. That will compensate,” Dangote said.
He also acknowledged that the broader economic impact of the falling oil price was a concern. “But it may also be a blessing in disguise because Nigeria will have to work harder to diversify the economy, especially when it comes to foreign exchange earnings,” he said.
“We as a group have seen this coming,” he said, adding that by the time the plant, which is partly being financed with a loan from the central bank, is up and running, “we won’t require a single dollar from the Central Bank of Nigeria. . . . With our export-orientated goods including cement, fertiliser and petrochemicals, we will be earning as much as $9billion annually.”
Dangote drew inspiration for the project from India’s Ambani family, whose Reliance Industries faced down skeptics to build the largest refinery in the world at Jamnagar in the late 1990s, giving it a dominant position in the Indian market.
“We won’t make our money back for five to six years. If I deploy that capital in buying blocks to sell oil even with the falling oil price, we could recover the money in three to four years. So the real beneficiary is the government,” Dangote concluded.