05 September 2013, Abuja – The Dangote Group Wednesday made history by signing of a combined $9.05 billion facility agreement with a consortium of local banks and international investors for the establishment of a refinery, and petrochemicals cum fertilizer complex in Nigeria.
Under the agreement signed at a crowded ceremony in Abuja, a $3.3 billion medium term loan will come from local banks and international finance organizations; $2. 25 billion from the Economic Commission for Africa, ECA, and Dangote’s equity contribution of $3.50 billion.
The Central Bank of Nigeria, CBN, also made a contribution of N50 billion with interest rate of 7 per cent to be repaid in 15 years.
Chairman of the group, Alhaji Aliko Dangote, described the complex to be located at the OK-LNG Free Trade Zone, between Ogun and Ondo states, as the largest industrial complex in Nigeria’s history and that he embarked on the project as a demonstration of his confidence in the Nigerian economy.
His words: “As an investor who believes in Nigeria, knows Nigeria well and whose prosperity was made in Nigeria, we have responded to the challenge with our decision to invest $9 billion in a refinery/petrochemical and fertilizer complex to be located at the OK-LNG Free Trade Zone. This complex will be the largest industrial complex project ever in the history of our great nation.”
He commended President Goodluck Jonathan’s administration for creating the enabling environment for businesses to thrive in the country, saying “We are happy to inform your excellences that because of the improvement in the enabling environment for investment created during this present government’s tenure we have had excellent response from the international finance organizations and today we are here to sign the agreement for the medium term loan of $ 3.3 billion.”
Dangote said the project had effectively taken off, with the award of the Engineering, Procurement and Construction, EPC, contract to Saipem of Italy for the fertilizer plant, noting that the Basic Engineering Design and optimization for the refinery had also been awarded.
When completed, the chairman said, the fertilizer plant would produce 2.75 metric tons per annum of Urea and Ammonia; while the refinery would process 400,000 barrels of crude oil per day.
We ‘ll produce high grade petrol – Dangote
He said the refinery would produce a higher grade of Premium Motor Spirit, PMS, popularly known as petrol, compared to imported ones, saying “in addition to high grade petrol, the refinery will produce: diesel, aviation fuel, household kerosene, slurry as raw material for carbon black, as well as 650,000 metric tons of polypropylene per annum. Our mission is to through industrialization, reverse the historical trend of the export of foreign exchange and jobs and replace it with foreign exchange conservation and job creation.”
Dangote added that the recent discovery and development of the shale oil and gas in “our traditional markets has further stressed the urgent need for us to diversify our economy on a fast track to avoid a reversal of the current steady improvement in all indices of economic performance.”
FG’s transformation agenda working—Sambo
Speaking, Vice President Namadi Sambo, called on other rich Nigerians to emulate Dangote who had invested in several sectors of the Nigerian economy as a demonstration of its confidence in the Nigerian economy.
Sambo said: “Let me use this medium to call on other prospective investors to take a que from the Dangoste group by seizing the opportunities offered by our various investment incentives; our economic policies, adequate market size, vast natural resources, arable land, labour capital and friendly environment to invest massively in Nigeria. We remain the number one investment destination in Africa and indeed all over the world. We are resolute in our effort to offer all the necessary support and encouragement for the private sector to thrive. The transformation agenda and the Vision 20:2020 cannot be actualized without the active participation of the private sector.
“The administration of President Goodluck Jonathan has made significant inroads in the creation of the enabling environment for private sector investment. This ceremony underscores and it is indeed a testimony of the positive mark our policy measures and directives are making in stimulating private sector investment both from within and outside our country.”
The vice president said that the Dangote complex would go a long way to reduce products costs , increase industrialization and improve the general well-being of the people, particularly farmers who had been yearning for fertiliser to boost outputs.
He said with the coming on stream of the refinery and the petrochemical plant, “Nigeria will reclaim its place of pride as one of the largest exporters of fertilizer, refined products and other petrochemical products, to consolidate on its efforts in ensuring the rapid development and the contribution of Africa to the global economy.”
CBN to subsidise refineries
The CBN Governor, Sanusi Lamido Sanusi, who announced that the N50 billion cheap loan had been made available to Dangote for the complex, said that the institution was prepared to support the real sector of the economy by providing subsidies to create wealth across various sectors.
He said that the complex deal was made possible through “the culmination of the results of the various reforms that the CBN carried out under Professor Charles Soludo and himself to strengthen Nigerian banks to make them big enough to finance mega projects.
Sanusi addede that the the facility was ”a demonstration that Nigerian banks are lending to the real sectors of the economy”, adding, “lending to the agricultural sector has jumped by about 600 per cent since 1999.”
Petroleum Minister speaks
On her part, Minister of Petroleum, Mrs. Diezani Alison-Madueke expressed satisfaction with Dangote’s decision to establish one of the largest private refineries in the country and called on other investors to move into the sector as “Nigeria has the capacity to take more of these.”
In the same vein, the CEO of Standard Chartered Bank in Nigeria, Ms Bola Adesola, said: “Standard Chartered is proud to support the Dangote Group in a project which will significantly boost Nigeria’s economic productivity and create valuable jobs with specialist skills from key growth sectors. This project is an historic example of self-empowerment and leadership for the continent as a whole – and is made possible through effective partnerships between the Nigerian private sector, Government and international financial institutions. Standard Chartered remains committed to being here for good in Nigeria, and the region.”
Largest syndication by banks —Agbaje
The Managing Director of Guaranty Trust Bank Plc, Segun Agbaje said: “This is the largest syndication by Banks in Nigeria and it is being undertaken with the knowledge that the successful implementation of Dangote Refinery and Fertilizer project will have far reaching implications for Nigeria’s economic growth.”
Other participating banks are Access Bank Plc, Zenith Bank Plc, Ecobank Nigeria Limited, Fidelity Bank Plc. First Bank Nigeria Limited, Standard Bank of South Africa Limited, UBA Plc, FirstRand Bank, First City Monument Bank Plc and Diamond Bank Plc.
Jonathan lauds Dangote
Meanwhile, President Goodluck Jonathan pledged that his administration will continue to implement policies that will continuously improve the operating environment for entrepreneurs and investors in the Nigerian economy.
Speaking at an audience with the President of the Dangote Group and leading Nigerian investors and bankers, President Jonathan said that his administration was fully committed to progressively removing all impediments to investment in Nigeria such as inadequate infrastructure and unsteady power supply.
The President lauded plans by Dangote Group to build Africa’s largest refinery, petro-chemicals and fertilizer manufacturing complex in Nigeria and thanked the consortium of banks who are providing a $3.3 billion credit facility for the project.
According to him, “we are pleased that you are now investing in refining, petro-chemicals and fertilizer production. It is the downstream sector of oil and gas that can really create many jobs. Your interest and investment in that area will help in the area of job creation which we had been emphasizing. You are also helping us to move away from being a mere producer of raw materials by adding value to our natural resources.”
Alhaji Dangote who led the team from his company, the Manufacturers Association of Nigeria, MAN, and Nigeria’s leading banks had earlier told the President that they were at the Presidential Villa to thank him for his administration’s policies which have greatly encouraged further investments in Nigeria.
Alhaji Dangote was accompanied by Chief Executives of participating banks including First Bank of Nigeria, UBA, Stanbic-IBTC, Zenith Bank, Access Bank, Ecobank, Fidelity Bank, Guaranty Trust Bank and Rand Merchant Bank.
Speaking with State House correspondents after the meeting, Alhaji Dangote reiterated that Nigeria’s current fuel importation would end by 2016 when the proposed Dangote Petrochemical project come on stream
Alhaji Dangote said the project would create about 85,000 jobs for Nigerians at the initial stage and 8,000 engineers.
Others on his delegation included Chief Kola Jamodu, Mr. Femi Otedola, Mr. Jim Ovia and management executives of the Dangote Group.
Jobs prospect thrills Labour
Meanwhile, African region of Industril Global Union, representing 50 million workers in Nigeria and other part of the globe has commended the Dangote Group for the $9 billion loan agreement to set up an oil refinery and petrochemical complex in Nigeria.
– Emma Ujah & Ben Agande, Vanguard