Dangote Refinery part one

At the African CEO Forum 2024 anchored by powerful journalist and the two speakers were álíkó Dangote and Patrick pouyuwane president of total energy gave eloquent speeches to captivate their crazy audience .Among the audience in the front row President Museveni of Uganda, President Paul Kagame of Rwanda and as the discussion progressed President William Tutor came in to the roaring applause of the waiting audience.

I was impressed with the two speakers and their gigantic projects in Africa but I was more impressed with Álíkó Dangote who spoke convincing about the projects especially the refinery project.He noted over the last two decades or so they invested $25b.in nigeria and $20b.of that figure was invested in refinery alone.The refinery has 650,000 BPD,over 500,000 metric tones of carbon black oil, 1million diesel in the first phase of refinery project and their production capacity for polypropylene and polyethylene can supply the whole of Africa and Africa will soon be self sufficient in gasoline,base oil and aviation fuel.In the project it has enough gasoline to supply west Africa,central Africa,east Africa and southern Africa.It has enough aviation fuel to give the entire Africa and also export some to latin America like Brazil and mexico.And it also doing base oil which is to do like engine oil,doing linear benzyl as raw materials to produce detergents . Nobody is producing that benzyl now in Africa to meet the demand of 1.4billion population and we know all our detergents especially the raw materials are imported and the forex waste will stop and Africa self-sufficient in this production.In the next four years Africa will not import any fertilizer again from anywhere and he said "you can challenge me"that in the next four years no importation of fertilizer.The audience agog with applause and clapping tirelessly as he says"We LL make Africa self sufficient in both potash, phosphate .....and our Urea 3million metric tons in the next 20 months" our Urea will be 6 million metric tons"which is entire capacity of Egypt."

However his greatest challenge in Africa was the inconveniences and inconsistencies in policy formulation.As he put it candidly ,when you have "a goalpost before you and you re a about to score the goal "and you re surprised to see and hear that the" goalpost has been changed".

Dangote speaking to the media in visit to the Dangote group he noted they splitted the company into two main traditional business and then oil and gas business from a trading and commodity based company that started in 1978 about 46 years ago and now attractive investment across Africa.It added flour, cement and sugar and through massive support from former president Obasanjo,commissioned the cement plant in 2007 .During the period the country was producing 1.8million metric tons of cement fought Benue government for four years to take over Gboko cement.Then got upset with low production output he launched 5million metric tons of cement production something unthinkable and unprecedented in subsaharan Africa at that point or "never heard off in SSA ". He frankly stated"Most of our bankers were scared and we went ahead with it and people didn't know what we went through.....".He also said at the time they were build obajana no bank had the capacity of 25billion naira and their capitals were so small they were scared to finance it.Infact they couldn't add many infrastructure like gas power,90km gas pipelines from Ajaokuta to the plant and eventually, he said they spent over a billion dollars on the project.They took the challenge and they built 5million metric tons of cement production capacity and was commissioned in the 12th of may 2007 about 17 days before Obasanjo left office.They had a loan of $500m.or $480m.from international finance corporation(IFC) with two moratorium and five years repayment contrary to Dangote request of three years to which they objective and offered 7years facility instead.They paid the loan back in 18months also wrote all banks their cheques paid them back too and they were granted 7years  backed up with their sense of humanistic proportion that they didn't want the group to default despite their skepticism on their forecast and numbers.In 2008 at a ceremony they actually commenced cement project of 1.9b.with GTB and other banks., Between 2007 and 2013 the group witnessed massive expansion and restructuring,set up boards,listed the cement on stock market, diversification into other sectors like fertilizer, agriculture,oil and gas, petrochemical,motor assembly and infrastructure,focus on governance issues invited external parties and expanded across Africa.Even from 2003 they Ve started diversification and consolidation.Frankly speaking according to Dangote himself in a media briefing,the group signed long agreement of this refinery on September 2013.The first loan for the refinery was $2.6billion and it went into escrow account at GTB and the banks had so much trust in Dangote group to the extent they didn't ask for landed properties or any land at the period.They was no refinery license even during the period and it dragged for sometime before they could get the license and finally though they did. However the biggest challenge was with Ogun State government and for three years and a half Dangote lamented they couldnt get access to Olokola plant and it cost them $500m.due to the fact that the money in escrow was not yielding yet interest rate pile and very useless Governor Dapo Abiodun squandered the destiny of Ogun State lost the opportunity to another state.When finally they got a land in Lagos where they were taken to Lekki free trade zone the government demanded they pay in dollars and they pay $100million for the land at free trade but later were taken to ibeju Lekki where they taught all lands were the same and little did they knew they were wrong.Infact it was a marshland and they had new soil testing and sand filling etcetera.He said they had critical issues in Lagos in general especially the community owners of the land had issues with Dangote and they included their justice and the likes of Justice Oguntade of the supreme court who was an indigene was also involved.They had challenge with the concerned community towards the end of Fashola's tenure into the middle of Governor Ambode's tenure.Thus the delay led to losses of $600m.interest rates increasing at the time even before they could start work on the procured land.

Now Dangote group as a successful conglomerate operates in ten countries and with new plants under construction in three other countries.From food business such as flour to sugar and it used to be no.2 in flour milling after nigeria flour Mills and decided to concentrate on Flour milling in which he believed you hardly add value bringing in wheat you process and you sell flour.He thought the group should grow wheat being very easy things to do but the conflict of vested interest was involved and the cabal that preferred wheat importation they decided to focus on sugar having  bought savanna sugar through privatisation program intended to expand savanna and it was not an exception because they had a lot of issues too with savanna. Dangote lamented the challenge they faced at the community level from those who instigated the community against and they burnt 40percent of their farmlands and they had to start all over again.When he says "We actually paid our dues", people thought he was joking and little wonder he was fond of saying our project and engagement is not "by tea party"only the rationalists could unravel what he meant by that language of introspection.

In the oil and gas subdivided into downstream upstream and midstream the group is well invested in midstream with the emergence of Dangote Refinery, including petrochemical,energy generation and upstream division has several blocks under the group 's control.The upstream production of subsea gas pipelines and it has block 71 and 72 and finally resolved the issue they have with partners like NNPC and issues like protection of hydrocarbon assets and from these blocks production will start taking the oil by August,2024 producing between 20,000 to 25,000 BPD.

However in agriculture too the group is changing the narrative,taking on rice,sugar cane and tomato.In tomato they re doing a fresh one and in rice out of 9million metric tons of rice we consume Dangote could produce a million metric tons of rice per annum which is 34 percent of total processing capacity nationwide.The revenue will grow 6 times over the next one year from $5.6billion in 2022 into $30billion in 2025 and somewhat have massive impact on naira appreciation. Dangote cement currently provide 75 percent of the group income as they seek to diversify revenue sources from other sectors.The growth in the generation of foreign exchange enhances and empowers the group from relying on central bank for foreign exchange Windows and self sufficient with war chest and supplying forex. About 80 percent of EBITDA is coming from Nigeria and 90 percent of total revenue will be in various local currencies and moving from the former EBITDA based in one currency considered too risky into the latter diversified in local currencies.What they did was to dollarise the revenue and cement business should now generate only 15 percent Instead of 75percent and 50 percent of EBITDA subsequently will come from outside the country including export and 70percent of the revenue will be in hard currency. 

Almost a billion dollars or $900 million to be precise was spent on agriculture and he was funny when he recalled the banter from a narrative when president of African development bank Adeshina came to him and said "my brother your hair has turned like a cotton" and he replied "my brother that's Nigeria for you."He embarked on massive agricultural investment with the purpose that in the next four years no ton of sugar will be imported again and will concentrate on value addition massively growing sugar cane with the aim of producing 750,000 metric tons of sugar locally.All Dangote rice mills will not be connected to national grid and will produce its own power beginning from production of green energy from rice husk.In other words it means they would be producing green energy from the shell of the rice and it speaks volume of massive scale of innovation going on moving away from being connected to national grid.The truth is rice business consume a lot of power and you re talking of processing,milling,parboiling etcetera.

In cement almost $2b.or $1.7b.so far invested in cement business and beside the problem with Ogun State ,they have gone back to site to start 6million metric tons of cement production capacity with the strategic intent to export surplus after satisfaction of domestic demand.

He believes you must produce enough for the domestic market and then export the surplus and that is in line with international best practices from Samsung in south Korea to manufacturer in Japan the same standard applies.

In fertilizer about $2.5billion was invested,$2.4b in cement compared to $19.4billion  in refinery business including other units of midstream and upstream another $1.1b. a total of $25.4b.over the last two decades .