Nigerian billionaire Aliko Dangote is seeking to raise billions of dollars to ramp up crude oil supplies for his $20 billion oil refinery, located on the outskirts of Lagos.
This is according to a report by a British media outlet, Financial Times, on Sunday.
According to the report, Dangote is reportedly in discussions with commercial banks, development lenders, oil traders, and other stakeholders to secure funding for crude procurement, according to sources familiar with the matter.
Dangote Industries, his company, has already sourced crude from the US and Brazil, and in July initiated talks with African suppliers, including Libya and Angola, as revealed by Devakumar Edwin, a senior executive at the group.
To reach the refinery’s full capacity of 650,000 barrels per day, Africa’s richest man needs a steady and expanded crude supply.
Securing a minimum supply of 300,000 barrels per day would cost approximately $2 billion every 90 days, according to sources.
Investors have reportedly grown frustrated over Dangote’s difficulties in securing a consistent crude supply, with concerns also raised about exposure to Nigeria’s volatile naira, which has sharply devalued following two currency adjustments in the past year.
“The refinery may never make a profit in real terms,” one banker involved in the fundraising said, citing its over-budget construction costs and the naira’s depreciation as significant challenges.
The Africa Finance Corporation (AFC), a pan-African development lender and an existing investor in the project, is among the institutions engaged in fundraising discussions.
Aliko Dangote has described the project as a transformative initiative for Nigeria, addressing what he called the “absurd” reality of Africa’s largest oil producer relying on imported refined petroleum due to insufficient domestic refining capacity.