Dangote Seeks Funding to Enhance Crude Supply for Nigeria’s Largest Refinery

Africa’s Richest Man Races to Transform Nigeria’s Oil Industry and Reduce Fuel Imports

Aliko Dangote, Africa’s wealthiest businessman, is making significant efforts to secure billions of dollars to enhance crude supply for his state-of-the-art oil refinery on the outskirts of Lagos. The $20 billion facility, the largest in Africa and one of the most ambitious projects globally, is at the center of his mission to reduce Nigeria’s reliance on imported refined petroleum products. By sourcing sufficient crude oil, the Dangote refinery crude supply challenge could soon be resolved, enabling the plant to reach its full production potential.

The refinery, which began limited operations earlier this year, currently produces jet fuel, naphtha, and petrol. To operate at its full capacity of 650,000 barrels per day, Dangote is engaging in talks with commercial lenders, development banks, oil traders, and other industry stakeholders. These negotiations aim to secure consistent crude supplies from domestic and international sources, including the U.S., Brazil, Libya, and Angola. According to Devakumar Edwin, a senior executive at Dangote Industries, partnerships with these suppliers are critical for sustaining the refinery’s output.

Despite progress, challenges remain. Meeting the Dangote refinery crude supply requirements involves hefty financial commitments. Experts estimate that securing a steady flow of 300,000 barrels per day could cost as much as $2 billion every three months. Additionally, concerns over Nigeria’s volatile currency, the naira, have made some potential investors hesitant. The naira’s recent devaluations have intensified fears about the profitability of the project, with critics questioning whether the refinery can achieve sustainable financial success under current conditions.

In a bid to address these issues, Dangote recently met with President Bola Tinubu and Mele Kyari, head of the Nigerian National Petroleum Corporation (NNPC), to negotiate a supply arrangement. Reports suggest that the NNPC has agreed to provide 365,000 barrels per day, paid for in naira, but skepticism remains regarding its capacity to deliver the promised quantities. The NNPC’s previous inability to fulfill its obligations, stemming from forward oil sales, further complicates the situation.

With NNPC holding a 7.2% stake in the refinery, Dangote must also source an additional 185,000 barrels per day to meet his target of 550,000 barrels by January 2025. The Africa Finance Corporation, already an investor in the project, is among the institutions assisting in the fundraising efforts. While the AFC previously facilitated initial capital for the refinery’s operations, its involvement in the current funding round underscores the scale of the financial challenge.

Aliko Dangote remains optimistic, describing the refinery as a “game-changer” for Nigeria. His vision is to meet the nation’s daily fuel demand of 30-35 million liters, eliminating the country’s dependence on fuel imports. However, critics argue that his dominance in the oil and cement industries risks creating monopolistic control, raising questions about market competition.

Ultimately, resolving the Dangote refinery crude supply hurdle will determine whether this ambitious project can live up to its promise of transforming Nigeria’s oil sector and achieving energy independence. As the refinery moves closer to full operational capacity, all eyes are on Dangote’s ability to navigate the financial and logistical challenges ahead.