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Nigeria Not Ripe for Rent-to-own Housing Model – Previs

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Housing - Investors King
  • Nigeria Not Ripe for Rent-to-own Housing Model – Previs

A real estate firm, Previs Developments, has said the rent-to-own system of homeownership is not a sustainable model in the country for now.

The firm stated that despite the seeming simplicity of the model, a careful study of the offering in the market now would show that the absence of mortgage financing had significantly limited the number of homes that could be delivered using the rent-to-own scheme.

According to the Managing Director, Previs Developments, Peter Coker, with some of the firm’s building developments sold out using the rent-to-own scheme, it has found out that the Nigerian real estate market is not yet ready for a rent-to-own model for houses.

“We want to cater to Nigeria’s underserved middle market. This is why we have created a product called Rent-to-Own Land. The logic is simple, without access to bulk funds, aspiring property owners must approach their home ownership in milestones – land first. Getting land is where the journey starts for most homeowners,” he said.

The Project Lead for Previs, Posi Lawore, stated that the firm was a Special Purpose Vehicle in the James Cubitt Group with a vision to make property ownership possible, enjoyable and meaningful for everyone, hence the need for the rent-to-own land scheme.

He added, “Under the RTOL scheme, our planned estates are strategically located. Subscribers under our RTOL scheme enjoy up to 200 per cent capital appreciation, because the estates are in developing areas, which are receiving focused attention from the government.

“These estates are properly planned. Subscribers know that their neighbours will not turn their residences to office spaces years down the line.”

He said the number of residential accommodations being transformed to office spaces continue to increase daily, and this would invariably change the dynamics to the living conditions and may affect property usage and pricing.

The Marketing and Communications Lead for Previs, Tolulope Olorundero, explained that the first phase of the company’s property in Lekki Phase II had been sold out, while the second phase was also fast selling out as subscribers were enjoying monthly and annual payment plans of up to five years.

“The estate is desi gned to deliver social amenities such as schools, recreation spots and communal spaces,” she added.

Is the CEO/Founder of Investors King Limited. A proven foreign exchange research analyst and a published author on Yahoo Finance, Businessinsider, Nasdaq, Entrepreneur.com, Investorplace, and many more. He has over two decades of experience in global financial markets.

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Dangote’s $20 Billion Refinery to Begin Petrol Sales Next Month

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Aliko Dangote announced on Monday that his long-awaited $20 billion refinery complex will commence petrol sales starting next month.

The announcement came during a press briefing held at the refinery site in Lagos, where Aliko Dangote, Africa’s richest man, detailed the project’s progress and future plans.

“We are proud to announce that the Dangote Refinery will begin selling petrol from August,” Dangote stated confidently.

“This milestone marks the culmination of years of meticulous planning, construction, and overcoming numerous challenges.”

Dangote’s refinery, touted as the largest single-train refinery in the world, is designed to process 650,000 barrels of crude oil per day once fully operational.

The facility aims to not only meet Nigeria’s domestic demand for refined petroleum products but also contribute significantly to export markets across West Africa.

“We have entered the steady-state production phase earlier this year, and now we are ready to begin commercial sales,” Dangote explained. “Initially, we will focus on petrol production, with plans to expand our product range as we ramp up to full capacity.”

The refinery’s launch is expected to alleviate Nigeria’s longstanding dependence on imported refined products, thereby boosting the country’s energy security and reducing foreign exchange outflows associated with fuel imports.

Beyond petrol sales, Dangote revealed ambitious plans to list both the refinery and its associated fertilizer plant on the Nigerian Exchange Group (NGX) by the first quarter of 2025.

This move aims to attract broader investor participation and unlock additional value for shareholders.

“We are committed to transparency and accountability in our operations,” Dangote emphasized. “Listing these subsidiaries on the NGX will not only strengthen our corporate governance framework but also enhance the refinery’s financial sustainability.”

Challenges and Future Prospects

Despite celebrating the imminent commencement of petrol sales, Dangote acknowledged challenges encountered during the project’s execution, including delays in securing land for a petrochemical facility in Ogun State, which incurred substantial costs.

“We faced bureaucratic hurdles that resulted in significant delays and financial losses,” Dangote lamented. “Nevertheless, we remain steadfast in our commitment to advancing Nigeria’s industrial capabilities and contributing to economic growth.”

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Dangote Refinery to Import First Brazilian Crude Oil Shipment Next Month

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The Dangote Refinery is set to receive its first shipment of Brazilian crude oil next month.

This is a pivotal moment in the country’s efforts to reduce its reliance on imported fuel and bolster its domestic refining capacity.

The purchase involves a one-million-barrel cargo of Brazil’s Tupi crude, scheduled for delivery in the latter half of August.

This is the first time Nigeria will be importing Brazilian crude, underscoring the Dangote Refinery’s commitment to diversifying its crude oil sources and ensuring a steady supply for its operations.

The Dangote Refinery, Africa’s largest, has been instrumental in Nigeria’s strategy to address the long-standing issue of fuel import dependency.

Despite being the continent’s leading oil producer, Nigeria has historically relied heavily on foreign fuel imports due to insufficient domestic refining capabilities.

The operationalization of the Dangote Refinery is expected to change this dynamic, enhancing the nation’s energy security and potentially lowering fuel prices for consumers.

Aliko Dangote, the CEO of Dangote Refinery, said “Importing crude and refining it locally will significantly enhance Nigeria’s energy security. Our ability to source crude oil from various global suppliers, including Brazil, is crucial for the refinery’s success and the broader energy strategy of the country.”

The Brazilian crude, sold by Petrobras, is among the most cost-effective and suitable oil grades available on the global market, making it an ideal choice for the refinery.

This strategic import is part of Nigeria’s broader efforts to secure a stable supply of crude for its refineries, ensuring that the country’s energy infrastructure is resilient and capable of meeting its needs without over-relying on any single source.

In a related development, the Nigerian Upstream Petroleum Regulatory Commission (NUPRC) recently reached an agreement with oil producers to supply crude oil to domestic refineries at market prices. This resolution came after a protracted supply dispute, which had strained relations with international oil companies.

The agreement ensures that Nigeria’s refineries, including the Dangote Refinery, have access to the necessary crude supplies at competitive prices.

This move is expected to end the challenges faced by local refineries, which have struggled to secure crude supplies due to excessive premiums demanded by international oil companies or claims of unavailability of crude.

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NNPC’s Stake in Dangote Refinery Drops to 7.2% Due to Unpaid Balance

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Dangote Refinery

Aliko Dangote, the Chief Executive Officer of Dangote Refinery, announced that the Nigerian National Petroleum Corporation (NNPC) Limited’s stake in the refinery has dropped from the previously held 20% to a mere 7.2%.

This reduction is attributed to NNPC’s failure to pay the balance of their shareholding dues, which was expected last month in June.

Dangote disclosed this during a media parley held at the refinery on Sunday, shedding light on the current ownership structure and the financial commitments made by the national oil company.

“The agreement was actually for 20%, but NNPC did not pay the balance of the money up till last year. We then gave them another extension up to June 2024, and they decided to remain at the 7.2% stake for which they had already paid,” Dangote stated.

This revelation has come as a surprise to many Nigerians who had been under the impression that the NNPC maintained a 20% stake in the refinery.

The reduction in ownership highlights the financial challenges faced by the state-owned oil company.

In 2021, the Group Managing Director of NNPC, Mele Kyari, had championed the decision to acquire a stake in the Dangote Refinery, citing the profit potential and the strategic importance of having a say in the refinery’s operations.

The investment was seen as critical to ensuring energy security for Nigeria and supporting the country’s fiscal stability.

Earlier this year, NNPC’s audited financial statements indicated that the corporation had acquired a 20% stake in Dangote Refinery for $2.76 billion.

This included a $1.036 billion funding from Lekki Refinery Funding Limited, of which $1 billion was paid to Dangote Refinery and $36 million covered transaction costs.

During the media parley, Dangote addressed various issues, including the challenges of supplying crude to the refinery.

He confirmed that the refinery has been sourcing crude from the United States and Brazil, while also noting the government’s intervention to resolve the supply issues.

The Dangote Refinery, located in the Lekki Free Zone, Lagos, is a massive project with a capacity of 650,000 barrels per day (BPD). Once fully operational, it aims to become Africa’s largest oil refinery and the world’s largest single-train facility.

The refinery is expected to generate approximately 9,500 direct jobs and an additional 25,000 indirect jobs, significantly boosting the local economy.

In addition to refining, the facility includes a fertiliser plant that will use by-products from the refinery as raw materials, further enhancing its economic and environmental impact.

The refinery is projected to produce around 50 million litres of petrol and 15 million litres of diesel daily, along with significant quantities of jet fuel and other petroleum products.

The reduction of NNPC’s stake underscores the financial complexities surrounding large-scale investments in Nigeria’s oil and gas sector.

As the Dangote Refinery nears full operation, the focus will be on how effectively it can address the country’s energy needs and contribute to economic growth, despite the challenges faced by its stakeholders.

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