Fitch: Dangote Seeks $750m Via Local Bond To Finance Refinery

Business magnate, Aliko Dangote is planning to establish a local bond programme amounting to $750 million to partially finance the completion of his 650,000 barrels per day refinery and petrochemical plant.

According to Fitch, one of the world’s biggest rating agencies, Dangote Oil Refining Company Limited (DORC) and Dangote Fertiliser Limited (DFL), which are Dangote Industries Limited’s subsidiaries, would be co-obligors under the programme that has already been proposed.

“Funding for the completion of the refinery project is expected to be partly covered by proceeds of the new bond. If the transaction is not successful, or should completion costs overrun or market conditions in the cement or urea sector deteriorate materially, we do not believe that DIL’s existing creditors would have further lending capacity. We believe that further asset sales, either in cement or stakes in the projects, would be the more likely options to address funding of the refinery.

“DIL is a diversified conglomerate in Nigeria with a leading share in the cement business and a future key operator in the petrochemical industry through its fertiliser and oil refinery business. Its strategy is to gradually establish a downstream industry in Nigeria and be the largest urea producer in Nigeria. It also aims to make Nigeria a net exporter of refined petroleum products and petrochemicals by 2026,” Fitch stated.

What you should know

BizWatch Nigeria understands that under this arrangement, interested investors would be offered a guarantee on capital and returns on a day in accordance with the provisions of the debt securities agreement.

About Dangote Refinery

  • Dangote refinery is a 650,000 barrels per day (BPD) integrated refinery and petrochemical project in the Lekki Free Zone in Lagos, Nigeria. It was pioneered by African richest man Dangote and is expected to be Africa’s biggest oil refinery and the world’s biggest single-train facility, upon completion.
  • The estimated $19 billion facility is an integrated refinery and petrochemical project which will meet 100% of Nigeria’s refined petroleum product requirement and even have a surplus for export when completed.
  • The project has suffered several setbacks in terms of completion date especially due to the coronavirus pandemic, which resulted in economic turmoil and exposed many vulnerabilities in supply chains leading to the delay in transport of some equipment to the refinery.
  • There is general optimism among stakeholders that the much-expected Dangote refinery will change the narratives in the nation’s downstream sector this year as it is expected to be one of the key drivers of growth that would impact positively on the downstream sector of the Nigerian economy in 2022.

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