Reports suggesting that Africa’s richest man and Chairman of the Dangote Group, Aliko Dangote, is seeking a multibillion-dollar bank loan to boost production at his Lagos refinery have sparked concerns among Nigerians.
The information was disclosed in a report by the Financial Times on Sunday, November 18.
According to the report, Dangote, who launched a $20 billion refinery aimed at ending Nigeria’s reliance on imported petroleum products, is reportedly in talks with commercial banks, development lenders, oil traders, and other stakeholders to secure funding for the refinery.
The funds are primarily needed to import additional crude oil, a critical requirement for achieving the refinery’s full production capacity of 650,000 barrels per day (bpd).
Since beginning production earlier this year, the refinery has processed about 420,000 barrels per day, with outputs including jet fuel, naphtha, and petrol.
This development initially raised hopes of reducing Nigeria’s dependence on fuel imports. However, challenges such as currency fluctuations and an unreliable crude oil supply chain have complicated operations.
The Nigerian National Petroleum Company Limited (NNPC), expected to supply a significant portion of the crude to the refinery, has struggled to fulfill this obligation.
Dangote has sought assurances from President Bola Tinubu and NNPC CEO Mele Kyari for a consistent supply of 365,000 barrels per day, with payments to be made in naira—a currency that has experienced sharp devaluation.
Internal sources revealed that Dangote is contending with rising costs of crude procurement and operational expenses, estimated at $2 billion every 90 days to maintain a baseline supply of 300,000 bpd.
Despite earlier statements by Dangote executives that crude had been sourced from the U.S. and Brazil, and negotiations were ongoing with African producers like Libya and Angola, the financial and operational challenges persist.
The naira’s devaluation has raised concerns among potential financiers, with some questioning the refinery’s long-term profitability. A banker involved in the fundraising, speaking anonymously, stated, “The refinery may never make a profit in real terms. It was built over-budget, and the naira, which is a major currency of future revenue, has devalued massively.”
These developments coincide with continued petrol importation by oil marketers in Nigeria. In a recent interview, Dangote urged the Federal Government to ban petrol imports, suggesting that oil marketers purchase directly from his refinery, which reportedly has over 500 million liters of petrol in stock.