Dangote Clarifies Forex Allocation to Refinery, Fertilizer Plant

By Crusoe Osagie and Ejiofor Alike
Africa’s richest man and President of Dangote Group, Aliko Dangote, has clarified that his refinery, petrochemical and fertilizer plant did not collect as much foreign exchange from the Central Bank of Nigeria (CBN) as some people have speculated, stressing that his company raised a substantial part of the forex being used in the execution of the multi-billion dollar project.
This is coming as Vice-President Yemi Osinbajo has described the refinery, fertilizer, petrochemical and gas pipeline project being executed by Dangote Group at a cost of $17 billion, as the largest single project in the world.
Speaking on Saturday during an inspection tour of the ongoing project by Osinbajo in the Lagos Free Trade Zone at the Ibeju-Lekki area of Lagos, Dangote said the company sourced the $100 million used in acquiring the land from the Lagos State Government and raised another $300 million capital to start the project without any assistance.
“Let me expatiate for you to understand so that you don’t get me misquoted. The loan for this project was taken by Dangote Industries, which is the holding company because the refinery is a brand new company and nobody will give you money for a brand new company.
“Dangote Industries used its balance sheet to borrow the money and there is an interest element that will have to be paying because we took the money since 2014. So the interest since 2014 to date is $173 million.
“That is the only forex we have received from the CBN for this plant out of the $12 billion we are using to build this plant.
“If you look at the fertilizer complex, the forex is in two components but they are all below $600 million out of $2 billion. So we have always been trying our best.
“For example, we bought the land for $100 million. Legally, we are not supposed to pay the Lagos State Government in dollars. So we brought in $100 million and changed it and paid them the naira equivalent at that time.
“We also brought $300 million capital to start the work. So we brought quite a substantial amount of our own money,” Dangote explained.
Obviously not amused by media reports alleging that his company received $161 million in 11 weeks from the CBN, the foremost industrialist argued that the amount was even insufficient when compared to the amount of foreign funds his companies use to run their operations.
“Yes, I don’t want to dispute the figures but even if we got $161 million in 11 weeks – 11 weeks is roughly three months; but we need about $98 to $100 million every month for the operations of Dangote Flour Mills, Dangote Sugar, Dangote Cement and diesel to fuel our 9,000 trucks.
“We are a company that minds its business and we don’t complain. When the exchange rate was moved from N197 to N280, we lost $420 million and that is almost N50 billion,” he added.
Dangote described himself as a proud Nigerian with no house or even a single block outside Nigeria.
“Yes, I have money but I don’t have properties or even a house outside Nigeria. Wherever I go, I stay in an hotel. This means that every amount of money we make here, we throw it back into the country. That is why we are doing all these,” Dangote said.
He recalled that the issue of forex allocation to his company arose after the CBN governor visited the project site and described it as the future of Nigeria and also promised that the central bank would render whatever assistance the refining and petrochemical project required.
“Really, the project we are doing here is to help diversify the economy of Nigeria and it is the largest single project anywhere in the world – be it fertilizer, gas pipeline, petrochemical or refinery. This is the largest single refinery in the world.
“The petrochemical plant that we have is 13 times bigger than the Eleme Petrochemical plant; what we are doing in terms of fertilizer is 10 times that of NAFCON (now Notore Fertilizer). It is the largest fertilizer plant in Africa,” he said.
Earlier in a presentation, the company stated that Nigeria would save $17.5 billion in forex earnings from the project.
The vice-president had during the tour of the project site, described the investment as the largest in the world, stressing that the gas pipeline and gas gathering projects would boost Nigeria’s electricity generation.
According to him, the gas project would add three billion cubic feet of gas per day to the Nigerian market, adding that with the current requirement of about two billion cubic feet of gas per day, Nigeria’s power sector would improve significantly when the project is completed.
“Many projects are going on here. It is clearly, and I venture to say that the project is possibly the largest in Africa. Here, we are building a refinery to refine 650,000 barrels of crude oil per day, which by all standards is the largest in the world.
“There are also the petrochemical and fertilizer plants, which are projected to be the largest in the world. There is also a pipeline project. I think it is quite an incredible industrial undertaking and possibly the largest and the most ambitious on the continent today. It is quite inspiring,” Osinbajo added.