Unique-Nigeria’s Dangote in talks with merchants for oil refinery mortgage

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LAGOS/LONDON (Reuters) – Africa’s richest man Aliko Dangote is in talks with a number of the world’s largest oil merchants to assist finance his mega refinery mission outdoors of Nigeria’s industrial centre Lagos, sources with data of the matter mentioned.

FILE PHOTO: View of the Dangote Oil Refinery below building in Ibeju Lekki district, on the outskirts of Lagos, Nigeria July 5, 2018. REUTERS/Akintunde Akinleye/File Picture

The 650,000 barrel-per-day refinery, as soon as full, would be the continent’s largest plant and redraw main commerce flows of crude and gasoline within the Atlantic basin.

Regardless of being Africa’s largest oil producer and exporter, the nation relies upon virtually fully on gasoline imports after permitting its vital refining capability, 445,000 barrels-per-day, to develop into dilapidated over a number of a long time.

Many previous and present Nigerian officers, together with President Muhammadu Buhari, have introduced plans to refurbish them however political will has been missing.

The Pure Sources Governance Institute, a non-profit coverage suppose tank, has beforehand pointed to the moribund refineries as a key focus of oil corruption and waste within the nation.

Hit by financial penalties of the COVID-19 pandemic and hovering building prices, Dangote wants a money injection.

Nigeria’s state oil agency NNPC has to agreed to purchase a 20% stake within the refinery for about $2.8 billion however Dangote is on the lookout for outdoors money. NNPC’s head Mele Kyari mentioned a course of was on-going to boost $1 billion with Afreximbank to fund a part of its stake buy.

The billionaire has held talks as not too long ago as a month in the past with executives from the world’s prime two oil merchants – Trafigura and Vitol.

Trafigura and Vitol declined to remark. A spokesperson for the Dangote Group didn’t reply to a number of requests for remark.

Two sources with direct data mentioned the choice of elevating one other $500 million from a commerce home or consortium was being actively explored.

The main points of a possible mortgage from a buying and selling agency haven’t been finalised however the dealer may obtain a long-term contract to provide crude and obtain cargoes of refined merchandise as reimbursement.

The refinery has been delayed by a number of years and the fee has ballooned to $19 billion from Dangote’s earlier estimates of $12-14 billion. Development was additionally delayed as a consequence of COVID-19 outbreaks amongst staff on the website and delays getting supplies, two sources with data of the mission mentioned.

Many business sources don’t count on any merchandise earlier than the second half of subsequent yr.

Swiss merchants like Vitol together with Nigerian corporations, have cashed-in for years in gasoline-short Nigeria by supplying mega tenders and being a part of profitable crude-for-fuel swap offers for over a decade.

Getting a maintain of Dangote’s gasoline will give the dealer a stranglehold on a key set of recent oil flows. Nigeria’s new oil invoice, authorised final month after practically 20 years of political wrangling, has added fuel-import licence necessities that specialists worry will give Dangote an efficient monopoly.

Beneath the brand new legal guidelines, the regulator will prioritize native refiners for import licences and volumes can be primarily based on manufacturing capability or market share.

Whereas Nigeria will stay open in idea to worldwide buying and selling homes, a partnership with Dangote can be the one approach to assure a foothold in Africa’s largest economic system.

Reporting by Libby George in Lagos, Julia Payne and Dmitry Zhdannikov in London, Writing by Julia Payne; enhancing by David Evans

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