Aliko Dangote, Africa’s richest man, has reflected on the enormous gamble he took in developing the Dangote Refinery—a venture that has not only transformed his financial standing but also reshaped the continent’s energy sector.
The 67-year-old tycoon described the refinery project as “the greatest risk of my life,” disclosing that the total investment soared past $20 billion, more than twice the initial budget.
In an exclusive conversation with Forbes, Dangote detailed the challenges behind the colossal initiative. Originally, the refinery was estimated to cost $10 billion, but expenses surged as he decided to expand its scope beyond the initial blueprint.
“If this had failed, I was finished,” he admitted to Forbes, underscoring the magnitude of the gamble he took when unveiling the refinery in 2013.
Dangote initially planned to establish the facility in southwestern Nigeria but encountered delays due to conflicts with local authorities. In a bold shift, he relocated the project to the Lekki Free Zone, near Lagos, purchasing land for $100 million. However, this move presented its own difficulties, as the swampy terrain necessitated dredging 65 million cubic meters of sand and the construction of a port to enable transportation.
Despite these obstacles, the Dangote Refinery commenced operations in 2024. Spread over 6,200 acres, it initially processed 350,000 barrels of crude per day (b/d), increasing to 500,000 b/d by January.
At full capacity, expected next month, the refinery will handle a staggering 650,000 b/d, ranking it as the seventh-largest refinery worldwide in output and the biggest in Africa. Next to the refinery, a petrochemical plant produces 3 million metric tons of urea annually, solidifying Dangote’s position as Africa’s top fertilizer producer.
How Dangote Financed His Refinery
The funding for the refinery was just as ambitious as its construction. To secure capital, Dangote obtained $5.5 billion in bank loans and sold shares in his cement company, raising $600 million from investors, including Dubai’s investment authority and an Australian sovereign wealth fund.
Additionally, his conglomerate—overseeing businesses in cement, flour, and sugar—issued a $10 billion intercompany loan to help cover the escalating costs. In the end, the total expenditure for the refinery ballooned to nearly $23 billion, far exceeding initial projections.
However, financial hurdles persist. With $3 billion in outstanding debt, concerns over liquidity prompted a credit downgrade by Fitch in August. This was due to the refinery’s underperformance in its early months and the drastic depreciation of Nigeria’s currency, the Naira, which has plunged over 70% since being floated in June 2023.
Despite these financial strains, Dangote remains optimistic about the refinery’s stability, pointing to its revenue model, which relies on international clients and is insulated from the Naira’s fluctuations.
Looking ahead, Dangote plans to construct a subsea pipeline to transport natural gas from the Niger Delta to Lagos and to enhance production at the refinery’s fertilizer plant.
Moreover, he is considering taking the refinery public in the coming years, underscoring his long-term vision for its success.
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