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Dangote Hunts for more Loans, Talks with Oil Traders to Borrow for Refinery


An option of raising another $500 million from a trade house or consortium was also being actively explored.

Africa’s richest man Aliko Dangote is reportedly in talks with some of the world’s biggest oil traders to help finance his mega refinery project in Lagos, Nigeria’s commercial capital.


Platforms Africa reports this, adding that option of raising another $500 million from a trade house or consortium was also being actively explored.

A report from Reuters has earlier gave the hint of the borrowing spree by the Dangote refinery.

The 650,000 barrel-per-day refinery, once complete, will be the continent’s largest plant and redraw major trade flows of crude and fuel in the Atlantic basin.


Aliko Dangote (left) in handshake with GMD, NNPC, Mele Kyari

Sources familiar with the development at the refinery confirmed that the promoter of the asset, Aliko Dangote, and his representatives have started meetings with global oil traders to secure loan facilities.

“These (loan) facilities could take various shapes depending on deals the party struck at the end of this on-going talks. Of course, this wil include talks on modalities for loan restruction when and if the need arises,” the aource told Platforms Africa.

This, leading Pan-African newspaper learnt, is also said to be a new determinant for success or failure of the deadline set for the completion of the refinery.

“The date set for completion may be a mirage if all these are not first thought through. Works have gone far on the istallation but Nigerians should prepare for another shift in completion date depending on the outcome of the on-going talks,” he said.

Despite being Africa’s biggest oil producer and exporter, the country depends almost entirely on fuel imports after allowing its significant refining capacity, 445,000 barrels-per-day, to become dilapidated over several decades.

Many past and current Nigerian officials, including President Muhammadu Buhari, have announced plans to refurbish them but political will has been lacking.

The Natural Resources Governance Institute, a non-profit policy think tank, has previously pointed to the moribund refineries as a key focus of oil corruption and waste in the country.

Hit by economic consequences of the COVID-19 pandemic and soaring construction costs, Dangote needs a cash injection.

Nigeria’s state oil firm NNPC has to agreed to buy a 20% stake in the refinery for about $2.8 billion but Dangote is looking for outside cash.

NNPC’s head Mele Kyari said a process was on-going to raise $1 billion with Afreximbank to fund part of its stake purchase.

The billionaire has held talks as recently as a month ago with executives from the world’s top two oil traders – Trafigura and Vitol.

Trafigura and Vitol declined to comment. A spokesperson for the Dangote Group did not respond to multiple requests for comment.

Two sources with direct knowledge said the option of raising another $500 million from a trade house or consortium was being actively explored.

The details of a potential loan from a trading firm have not been finalised but the trader could receive a long-term contract to supply crude and receive cargoes of refined products as repayment.

The refinery has been delayed by several years and the cost has ballooned to $19 billion from Dangote’s earlier estimates of $12-14 billion.

Construction was also delayed due to COVID-19 outbreaks among workers at the site and delays getting materials, two sources with knowledge of the project said.

Many industry sources do not expect any products before the second half of next year.

Swiss traders like Vitol along with Nigerian firms, have cashed-in for years in gasoline-short Nigeria by supplying mega tenders and being part of lucrative crude-for-fuel swap deals for over a decade.

Getting a hold of Dangote’s fuel will give the trader a stranglehold on a key set of new oil flows. Nigeria’s new oil bill, approved last month after nearly 20 years of political wrangling, has added fuel-import licence requirements that experts fear will give Dangote an effective monopoly.

Under the new laws, the regulator will prioritize local refiners for import licences and volumes would be based on production capacity or market share.

While Nigeria will remain open in theory to international trading houses, a partnership with Dangote would be the only way to guarantee a foothold in Africa’s biggest economy.


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