Aliko Dangote, Africa’s wealthiest individual, has reflected on the immense risk he undertook in building the Dangote Refinery, a project that has not only redefined his fortune but also reshaped Africa’s energy landscape.
The 67-year-old billionaire described the refinery venture as “the biggest risk of my life,” revealing that the final investment exceeded $20 billion, more than double the original budget.
In an exclusive interview with Forbes, Dangote shared the complexities behind the massive undertaking. Initially, the refinery’s projected cost was $10 billion, but the price escalated as Dangote insisted on expanding its scope beyond the original plans.
“If this didn’t work, I was dead,” he admitted to Forbes, acknowledging the enormity of the gamble he took when he first announced the refinery in 2013.
Dangote initially planned to build the facility in southwest Nigeria but faced delays due to disputes with local officials. In a dramatic pivot, he relocated the project to the Lekki Free Zone, just outside Lagos, paying $100 million to secure the land. The move, however, came with its own set of obstacles, as the swampy terrain required dredging 65 million cubic meters of sand and constructing a port to facilitate transport.
Despite these setbacks, the Dangote Refinery began operations in 2024. Situated on a 6,200-acre site, the refinery initially processed 350,000 barrels of crude per day (b/d), reaching 500,000 b/d by January.
With full capacity slated for next month, the refinery will process a staggering 650,000 b/d, positioning it as the seventh-largest refinery globally by production and the largest in Africa. Adjacent to the refinery is a petrochemical complex that produces 3 million metric tons of urea annually, making Dangote the continent’s largest fertilizer producer.
How Dangote raised funds for his refinery project
The financing of the refinery was no less ambitious. To fund the project, Dangote secured $5.5 billion in bank loans and divested stakes in his cement business, raising $600 million from investors including Dubai’s investment corporation and an Australian sovereign wealth fund.
Additionally, his holding company, which oversees Dangote’s cement, flour, and sugar businesses, provided a $10 billion intercompany loan to cover the project’s rising costs. The total bill for the refinery ultimately reached nearly $23 billion, significantly surpassing the initial estimates.
However, the refinery still faces financial challenges. With $3 billion in outstanding debt, the project’s liquidity came under scrutiny, leading to a downgrade from Fitch in August.
This was attributed to the under-utilization of the refinery in its early months and the severe depreciation of Nigeria’s Naira, which has lost over 70% of its value since the currency was floated in June 2023.
Despite these hurdles, Dangote remains confident in the refinery’s financial stability, citing its dollar-based revenue model from foreign clients as a buffer against the Naira’s volatility.
Looking ahead, Dangote has plans to build a subsea pipeline to transport natural gas from the Niger Delta to Lagos and to expand production at the refinery’s fertilizer plant.
Furthermore, Dangote is eyeing a public listing for the refinery within the next few years, signaling his long-term vision for the project’s success.
