Nigeria to restore refining capacities with private loans
On September 4th 2013, the Nigeria private Dangote Group (Dangote) sealed a financial agreement with 12 banks for a $3.3 billion loan to build a greenfield refinery and petrochemical complex in Olokola in the south of Nigeria.
With $8 billion capital expenditure, this $3.3 billion loan will contribute to the $6.75 debt financing required to complete the equity directly provided by the Dangote Group.
Ranked as the richest man in Africa and among the top 25 in the world with $20 billion fortune, the billionaire Aliko Dangote controls about 30% of the Nigerian Stock Exchange with most of his interest concentrated on the cement and food industry in Nigeria and sub-Sahara Africa.
As the largest crude oil producer in Africa Nigeria is sick from its refining industry with 445,000 barrels per day (b/d) capacity through four refineries.
Two of these refineries are located in Port Harcourt, one in Kaduna and one in Warri.
All together these refineries are only running at 20% of their nominal output.
Therefore Nigeria is turning to become Africa largest importer of refined products, petrochemicals and fertilizers.
With a population to reach 200 million inhabitants before 2020, Nigeria cannot afford to continue to rely on 80% import to cover its domestic needs in transportation fuels and fertilizer to boost the agriculture at the convenient levels.
In this context, Dangote decided to invest $8 billion capital expenditure in a greenfield integrated refinery and petrochemical complex with the support of a consortium of 12 banks.
The international Standard Chartered Bank and the local Guaranty Trust Bank coordinated the pool of the national and foreign banks to support the $3.3 loan.
UOP, EIL, Saipem won Dangote Olokola first contracts
With the signature of the financing, Dangote awarded the first contracts for the Integrated Refinery and Petrochemical Complex.
The refining technology has been licenced from the US-based UOP/Honeywell.
The Indian state-owned engineering services company India Engineers Limited (IEL) has been appointed to provide project management consultancy (PMC) from the design stage to the execution phase.
In March 2013, Saipem was awarded the contract for the front end engineering and design (FEED) and the engineering, procurement and construction (EPC) contract for the fertilizer plant with the support of the Indian services from Tata Projects for the project management consultancy (PMC)
This fertilizer plant will be located in Edo State while Dangote selected the Olokola Free Trade Zone (FTZ), across the Ogun and Ondo States, to build the integrated and petrochemical complex.
The Dangote refinery and petrochemical complex will be designed with a capacity of:
– 400,000 b/d of crude oil
– 600,000 tonnes per year (t/y) of Polypropylene
Since the first contracts have been awarded to UOP/Honeywell, EIL, Saipem, and Tata Projects, Dangote expect the Olokolay Refinery and Petrochemical complex to come on steam in 2016.
