Dangote, 11 banks seal $3.3bn refinery deal

The Dangote Group on Wednesday sealed a $3.3bn medium term deal with 11 local and foreign banks to finance the building of a petrochemical plant consisting of a refinery and fertiliser plant in the country.

The investment initiative is in form of a loan agreement for the construction of a petrochemical plant to be located at the Olokola Free Trade Zone in Ondo and Ogun states.

The refinery, according to the President, Dangote Group, Alhaji Aliko Dangote, will become operational in 2016 and generate over 10,000 direct jobs and end the importation of refined petroleum products into the country with the attendant multiplier effects on the manufacturing sector.

When completed, he said the refinery would to be the largest in Africa, thus turning Nigeria into a petroleum exporter.

The loan facility was coordinated globally by Standard Chartered Bank and was co-financed in Nigeria by Guaranty Trust Bank Plc, Access Bank Plc, Zenith Bank Plc, Ecobank Nigeria Limited and Fidelity Bank Plc.

Other co-financiers are First Bank of Nigeria Limited, United Bank for Africa Plc, First City Monument Bank Plc, Diamond Bank Plc, FirstRand Bank and Standard Bank of South Africa Limited.

Speaking at the signing of the loan agreement in Abuja on Wednesday, Dangote said the investment was a way of dealing with the threat posed to Nigeria’s economy following the discovery of shale oil and gas by buyers of the country’s crude.

The investment, he said, was also a good step to support the Federal Government’s efforts at diversifying the economy.

Dangote said “As an investor who believes in Nigeria, knows Nigeria well and whose prosperity was made in Nigeria, we have responded to the challenge with our recent decision to invest over $9bn in a refinery/petrochemical and fertiliser complex to be located at the OKLNG Free Trade Zone. This complex will be the largest industrial complex project ever in the history of our great nation.

“Funding for the project will come from a $3.3bn medium term loan, the agreement for which we are signing today, and also an additional $2.25bn from the Development Financial Institutions to augment our equity contribution of $3.50bn.”

The business mogul pointed out that when operational, 2.75 metric tonnes per annum of Urea and Ammonia would be produced from the fertiliser plant, while the refinery would have the capacity to process 400,000 barrels of crude oil per day.

Speaking after a meeting with President Goodluck Jonathan at the State House, Dangote gave an assurance that Nigeria would no longer import petroleum products once the plant commenced operation.

Dangote met the President in company with some officials of his company, members of the Manufacturers Association of Nigeria and chief executives of the participating banks, who raised the $3.3bn credit.

He said, “Now, Nigeria is going to be taken out of the list of countries that import petroleum products. We will produce 20 million metric tonnes, which is equivalent to what Nigeria consumes currently.

“Today, we did the signing ceremony, the vice-president came to witness the signing but we insisted on coming to thank Mr. President so much for his policies.

“Without good government policies, there is no way the private sector can invest in Nigeria, because we are not Father Christmas at all. The policies have to be right.”

Also speaking at the event, the Governor, Central Bank of Nigeria, Mr. Lamido Sanusi, associated the deal to the success of the banking sector reforms by the central bank.

This, he noted, had boosted lending to the real sector.

Sanusi said the success of the reform was a testimony to the fact that Nigerian banks could offer credit when any project that could add value to the real sector was being provided.

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