Africa’s richest man, Aliko Dangote, is seeking billions of dollars to secure crude oil supplies for his $20 billion refinery in Lagos. This effort is aimed at ramping up production at the facility, which is Nigeria’s largest infrastructure project in decades.
According to a Financial Times report on Sunday, Dangote is in talks with commercial lenders, development banks, oil traders, and other industry players to raise funds for consistent crude supplies. The Africa Finance Corporation (AFC), a Nigerian pan-African development lender and an investor in the refinery, is among those involved in the discussions.
The Dangote refinery, which started producing diesel and aviation fuel earlier this year, needs around $2 billion every three months to secure a minimum supply of 300,000 barrels of crude oil per day. While the facility has a production capacity of 650,000 barrels per day, it has yet to reach that target.
The project has faced challenges, including concerns from potential investors over Nigeria’s devalued naira, a significant currency for future revenue. A banker involved in the fundraising expressed frustration over the refinery's struggle to secure a steady crude supply, while another raised doubts about its profitability due to construction over-budgeting and naira depreciation.
In September, the refinery began producing petrol, fueling optimism that Nigeria could reduce its dependence on imported petroleum products. However, by October, crude supply issues surfaced, prompting Dangote to hold an emergency meeting with President Bola Tinubu and NNPC Group CEO Mele Kyari. During the meeting, Dangote discussed a plan to have NNPC supply 365,000 barrels of crude daily, with payments made in naira.
NNPC, which initially held a 20% stake in the refinery, reduced its share to 7.2% after failing to fulfill a $2.7 billion payment agreement. The company paid $1 billion upfront in 2021 but decided to use the remaining funds for investments in compressed natural gas (CNG).
Despite these challenges, Dangote has called the project a "game changer" for Nigeria, aiming to address the “absurd” reality where Africa’s top oil producer relies heavily on fuel imports. Currently, the refinery produces 420,000 barrels per day, with full capacity expected by the second quarter of 2025.
While hurdles remain, this refinery represents a significant step towards transforming Nigeria’s refining industry and reducing reliance on imported fuel.
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