Welcome, Guest: Register On Nairaland / LOGIN! / Trending / Recent / New
Stats: 2,936,514 members, 7,105,737 topics. Date: Thursday, 06 October 2022 at 05:28 PM

Dangote Refinery: Bailing Out The Unbailable - Investment Or Bailout? - Business - Nairaland

Nairaland Forum / Nairaland / General / Business / Dangote Refinery: Bailing Out The Unbailable - Investment Or Bailout? (29345 Views)

Dangote Refinery: Bailing Out The Unbailable Investment Or Bailout? / Dangote Refinery Gate, Lagos Gradually Taking Shape (Photos) / World's Largest Atmospheric Tower For Dangote Refinery Sets Sail From China (PIC (2) (3) (4)

(1) (2) (3) (4) (5) (6) (7) (Reply) (Go Down)

Dangote Refinery: Bailing Out The Unbailable - Investment Or Bailout? by jerrybone(f): 7:52pm On Jul 16, 2021
It was hailed as the best thing to happen in the oil and gas sector especially in Nigeria – a serial importer of crude products. The year was 2013 and in September of that year, Aliko Dangote, Africa’s richest man, announced yet another of his gargantuan projects – the construction of the biggest single train refinery in the world with production expected to begin in 2016. Many delays and postponements later, the project has been bogged down by barely serviceable debts, poor planning, lack of centralized project management, mismanagement and has now become a huge albatross on Nigeria’s neck costing the country lots of FX and creating huge problems in return.

VALUATION

A project that started as a 9billion dollars project is now being valued at over 16 billion dollars, albeit incorrectly. Sampling expert opinion from leading players in the oil & Gas industry, it is estimated that a refinery of that size should ideally cost within the range of 11 to 12 billion dollars to build in Nigeria. Notwithstanding the conflicting figures, it was recently announced that the Nigerian National Petroleum Corporation, NNPC, will be taking a 20% stake in the uncompleted, non-functional Dangote Refinery at the cost of 3.8billion dollars. Whilst this baffled many, NNPC’s actions effectively over-valued the yet to be completed refinery to 19billion dollars.

PROJECT DELAYS OR PROJECT DELAY-ED

As at last count, the completion of the refinery had been moved eight times. Whilst some might say this is in character for Dangote Industries and their numerous projects across different sectors, the problem is deeper rooted. A contractor at the delayed refinery project, speaking under the condition of anonymity said that poor planning, underpayment of contractors, and a lack of proper project management with over 40 contractors on site has led to most of the delays. He also added that of the 40, none is willing to commission as there is no clear delegation of duty and over-decentralization leading to absolute chaos.

With these incessant delays, Banks are already calling in their loans. At the announcement of the project in 2013, Mr. Dangote said he had secured financing of 3.3billion dollars. This debt burden has now risen to 7billion dollars with debt servicing of almost 700million dollars per annum. Whilst Mr. Dangote has been able to restructure the facilities from various local and international banks twice so far, most banks have totally refused to restructure for the third time with principal repayment also falling due - as well as the annual interest payments.

Things have gotten so bad for the billionaire that even income from his other businesses are barely enough to cover the interest rates talk less of the principal. This has led Mr. Dangote to seek innovative ways, including state capture, to prop up his business now that the refinery project has been consistently delayed and he has run out of money to repay. Enter the NNPC Connection, Nigeria’s controversial PIB Amendment and the Crude Swap Saga.

THE NNPC CONNECTION – BAILING OUT THE UNBAILABLE

After taking FX at concessionary rates from the CBN, Nigeria is inexplicably tied at the apron strings to Mr. Dangote’s now-threatened refinery. Estimates by professional industry analysts and those close to the project put its completion date in 2024 or 2025.

Recently, the NNPC announced, under some obscure arrangement, that it was taking a 20% equity in the Dangote refinery at 3.8billion dollars. The NNPC was later to explain that it was giving only 1 billion in cash and the balance in crude.

Whilst this is a welcome development, Mr. Dangote will have a hard time doing anything tangible with the 1billion dollars cash which is barely enough to cover one years’ interest. With some principal payments falling due and the banks’ unwillingness to restructure in the face of an estimated completion timeline of 2024 at the earliest, Messrs. Dangote will need at least 3 to 4 billion to complete the project over the next few years even with this bailout. Both the way the refinery project has been carried out, and this subsequent NNPC bailout for Dangote refinery has turned Nigeria into a laughingstock on the global stage.

As for the controversial PIB bill currently before the Nigerian National Assembly, it is now clear to keen watchers that the reason the government wants to give a monopoly of importation for petroleum products into the country to Messrs. Dangote is so he can make the excessive and extra profits he needs to manage his rising debt profile for the refinery (under the guise of ongoing refinery projects). Guess who will bear the brunt of the higher costs in petroleum products at a time when subsidies are being reduced? The Nigerian people.

With his refinery project costs way overboard, banks breathing down his neck and NNPC’s strange bailout seemingly meagre to take care of the principal and interest payments for his debts, is the Dangote Refinery a dead project even before it is completed, or will time be kind and permit the completion of this project to which Nigeria has mortgaged huge FX from its treasury to see it kick off in good time? The chicken has come home to roost, it may seem.

Finally, with the one billion dollars going towards the repayment of principal and interests which are falling due in August, the manipulations by NNPC and politicians at the National Assembly has now become clear for all to see… As it stands, some government agencies and politicians are more than willing to mortgage the interests of the nation and masses to bail out the unbailable refinery project. Welcome to the Republic of Dangote!

David Bako is a seasoned Economist writing from Abuja
https://investorsreel.com/dangote-refinery-bailing-out-the-unbailable-funding-or-bailout/

50 Likes 6 Shares

Re: Dangote Refinery: Bailing Out The Unbailable - Investment Or Bailout? by Goldenboy224: 10:14pm On Jul 16, 2021
cool
If Nigeria breaks (Biafra, Oduduwa, Ijaw and Arewa).
You will truly know that dangote is just a political tool.

102 Likes 5 Shares

Re: Dangote Refinery: Bailing Out The Unbailable - Investment Or Bailout? by prezee1(m): 10:14pm On Jul 16, 2021
Anything you call it, I still don't believe in oneness of Nigeria, taking chukwuemeka money to enrich Haruna

91 Likes 4 Shares

Re: Dangote Refinery: Bailing Out The Unbailable - Investment Or Bailout? by Nobody: 10:15pm On Jul 16, 2021
prezee1:
Anything you call it, I still don't believe in oneness of Nigeria, taking chukwuemeka money to enrich Haruna

Don't you see any around?

15 Likes 4 Shares

Re: Dangote Refinery: Bailing Out The Unbailable - Investment Or Bailout? by mbahdi(m): 10:15pm On Jul 16, 2021
Dangote d mvp of nigeria.a good man with a devil's heart

15 Likes 1 Share

Re: Dangote Refinery: Bailing Out The Unbailable - Investment Or Bailout? by sweetkev(m): 10:15pm On Jul 16, 2021
Monopolist Guru tongue

5 Likes 1 Share

Re: Dangote Refinery: Bailing Out The Unbailable - Investment Or Bailout? by Risingblue008(m): 10:15pm On Jul 16, 2021
Characteristics of zoo republic
grin grin grin

8 Likes 1 Share

Re: Dangote Refinery: Bailing Out The Unbailable - Investment Or Bailout? by Algold: 10:15pm On Jul 16, 2021
A
Re: Dangote Refinery: Bailing Out The Unbailable - Investment Or Bailout? by free2ryhme: 10:15pm On Jul 16, 2021
Re: Dangote Refinery: Bailing Out The Unbailable - Investment Or Bailout? by torime: 10:15pm On Jul 16, 2021
I comment my reserve
Re: Dangote Refinery: Bailing Out The Unbailable - Investment Or Bailout? by oluseyiforjesus(m): 10:15pm On Jul 16, 2021
As long as his cement is not cheap is not a bailout but ............
It's a big shame if FG celebrate ds refinary, wat u can't build a man single handedly built it. It's a shame on FG

11 Likes 1 Share

Re: Dangote Refinery: Bailing Out The Unbailable - Investment Or Bailout? by ZUKKYY(m): 10:16pm On Jul 16, 2021
Loading...
Re: Dangote Refinery: Bailing Out The Unbailable - Investment Or Bailout? by Seniorwriter(m): 10:16pm On Jul 16, 2021
Reading....

After reading no need for comment !!!

In another news We need young visionary leadership.
zoeA:

You can be what you seek.
Why do men always want to be led?
I'm a leader in my humble technocracy capacity already!!!
Not all men are made to be leaders in politics some are made to be positively directed critics Team Leads.

@Seniorwriter

3 Likes 1 Share

Re: Dangote Refinery: Bailing Out The Unbailable - Investment Or Bailout? by inoki247: 10:16pm On Jul 16, 2021
ok
Re: Dangote Refinery: Bailing Out The Unbailable - Investment Or Bailout? by Igbaba2(m): 10:16pm On Jul 16, 2021
trying his possible best..........
Re: Dangote Refinery: Bailing Out The Unbailable - Investment Or Bailout? by PCG001: 10:16pm On Jul 16, 2021

2 Likes

Re: Dangote Refinery: Bailing Out The Unbailable - Investment Or Bailout? by TheSparrow: 10:16pm On Jul 16, 2021
This writeup is loaded with ignorance, weak assumptions and false narratives.

36 Likes 4 Shares

Re: Dangote Refinery: Bailing Out The Unbailable - Investment Or Bailout? by Highbeepeeh(m): 10:16pm On Jul 16, 2021
sad

Is not that am too lazy o...
but how do you expect me to go through all this note before I can get the message....

I bet 99% of people won't read what OP post rather they'll skip to read comments.

See Nigeria get Nigerians problem
One Day Nigeria will be save from Nigerians problem, then Nigerians will make Nigeria great.

7 Likes 1 Share

Re: Dangote Refinery: Bailing Out The Unbailable - Investment Or Bailout? by Nobody: 10:17pm On Jul 16, 2021
I no even dey understand all these una up and down sometimes
Re: Dangote Refinery: Bailing Out The Unbailable - Investment Or Bailout? by MANNABBQGRILLS: 10:17pm On Jul 16, 2021
Anything to move our darling nation forward is what we are after.

God bless Dangote, AKA A.D!
God bless all good, sane, honest and hardworking Nigerians.
God bless Nigeria.

4 Likes 4 Shares

Re: Dangote Refinery: Bailing Out The Unbailable - Investment Or Bailout? by damosade(m): 10:17pm On Jul 16, 2021
That place is a city on its own. Was there yesterday .

7 Likes 2 Shares

Re: Dangote Refinery: Bailing Out The Unbailable - Investment Or Bailout? by upower123(m): 10:17pm On Jul 16, 2021
Life goes on..just to favour them

1 Like

Re: Dangote Refinery: Bailing Out The Unbailable - Investment Or Bailout? by TrebleChamp(m): 10:18pm On Jul 16, 2021
Dangote' white elephant project....

9 Likes 1 Share

Re: Dangote Refinery: Bailing Out The Unbailable - Investment Or Bailout? by Folabifreeman(m): 10:19pm On Jul 16, 2021
The Rich keeps getting richer

The poor still Feeding the Rich.

1 Like 1 Share

Re: Dangote Refinery: Bailing Out The Unbailable - Investment Or Bailout? by Saifullah01: 10:19pm On Jul 16, 2021
Hmm
Re: Dangote Refinery: Bailing Out The Unbailable - Investment Or Bailout? by Tyche(m): 10:19pm On Jul 16, 2021
Hmmmmmm
Re: Dangote Refinery: Bailing Out The Unbailable - Investment Or Bailout? by Jimasun: 10:19pm On Jul 16, 2021
This report is so fake

2 Likes

Re: Dangote Refinery: Bailing Out The Unbailable - Investment Or Bailout? by MEGAWATCH: 10:19pm On Jul 16, 2021
Ajokuta steel unsuccessful,
Dangote refinery going the same way,
What will ever work in Nigeria?

12 Likes 1 Share

Re: Dangote Refinery: Bailing Out The Unbailable - Investment Or Bailout? by deeptechcool(m): 10:20pm On Jul 16, 2021
No surprise

1 Like

Re: Dangote Refinery: Bailing Out The Unbailable - Investment Or Bailout? by Akwamkpuruamu: 10:20pm On Jul 16, 2021
Na dem sabi

(1) (2) (3) (4) (5) (6) (7) (Reply)

Households, Restaurants Switch To Charcoal, Firewood As Gas Price Hits The Roof / Analysts Predict Naira Devaluation To N400/$ / Naira Situation Worsens, Falls To N270/$

(Go Up)

Sections: politics (1) business autos (1) jobs (1) career education (1) romance computers phones travel sports fashion health
religion celebs tv-movies music-radio literature webmasters programming techmarket

Links: (1) (2) (3) (4) (5) (6) (7) (8) (9) (10)

Nairaland - Copyright © 2005 - 2022 Oluwaseun Osewa. All rights reserved. See How To Advertise. 98
Disclaimer: Every Nairaland member is solely responsible for anything that he/she posts or uploads on Nairaland.