The Dangote group is owing Access Diamond Bank, Zenith Bank Plc, and other commercial banks an outstanding of $2.7 billion debt, after offsetting significant portion of $9 billion initial loans provided by the Nigerian banks to finance the 650,000 barrels per day (bpd) refinery in Lagos.
Godwin Emefiele, Governor of the Central Bank of Nigeria, made this revelation on Monday at the official launching of the Dangote Oil Refinery in Lagos State by the outgoing President, Muhammadu Buhari.
According to him, an outstanding balance of $2.7 billion is yet to be settled as part of the commercial loan component of the project that was facilitated by domestic banks, in addition to the loans obtained from foreign banks and development funding institutions.
He said, “Dangote has paid off some portion of the commercial loan even before the commissioning, as of today, the total loan outstanding has dropped from over $9 billion to $ 2.7 billion.
“This reflects the astute creditworthiness and commercial capability of Dangote.
“The commercial bank provided intensive financing and was clearly aware of the importance of the project to the economy of Nigeria.
“They provided support and exceptional understanding even when principal payments were almost overdue. The banks were patient with Dangote,” the CBN boss said.
Emefiele further noted that the Dangote refinery was initially estimated to cost just about $9 billion, but the project cost increased to a total of $18.5 billion.
He added that Dangote contributed 50 percent equity investment to the project with 50 percent debt finance by banks and multilateral development banks, including African Export-Import Bank (AFREXIMBANK) and African Development Bank (AfDB).
He further confirmed that the CBN has been partnering with Dangote to ensure the successful completion of the refinery project by providing over N125bn to cover domestic financial requirements.
Emefiele also noted that the CBN has ensured the availability of foreign exchange to pay for the importation of some of the plants and machinery used in the development of the facility.
This, according to him, was part of President Buhari’s commitment to ensure that Nigeria produces what it consumes and consumes what it produces.
Emefiele said, “This is a testament to the entrepreneurial spirit of Nigerians. It shows that regardless of what the global community says about Nigeria.
“It is an extreme delight that the impossible has become possible and I am glad that we never doubted our capability.
“The importation of petroleum products and fertilizers resulted in over $26 billion in foreign exchange in 2022. The self-sufficient petroleum products, Urea, and polypropylene in Nigeria are an attestation to the focus and commitment of strong leadership of the outgoing administration.
“This comes with numerous economic benefits by generating direct jobs of over 135,000 permanent jobs, and 12,000 MW of electricity will also be generated from the plant.
“This project has availed Nigeria of a significant opportunity to save foreign exchange and ease its fiscal burden.
“Available data from the CBN, as of 2014, shows that 30 percent of forex required to meet the country’s import needs went into the importation of refined petroleum products.
“It is instructive that according to the balance of payment statistics, the cost of importing petroleum products into Nigeria doubled over a 5-year period from over $8.4bn in 2017 to $16.billion including an annual average of $11bn before rising further to $23.3bn at the end of 2022.
The CBN Governor, therefore, warned that the average annual import cost of importing petroleum products to Nigeria could reach $30bn by 2027 if the country continues to rely on petroleum products importation.
Emefiele said, “This figure suggests that the refinery could generate foreign exchange savings to our country of $25bn and $30bn annually aside from the saving of $30bn from the importation.
“The Nigeria’s economy is projected to benefit from an extra forex exchange of $10 billion annually through the exportation of refined products from the refinery.
“It would provide support to the FG by easing budget constraints of funding petrol subsidy and engender fiscal savings.
“Dangote refinery is a blessing given the spillover of this project and is even expected to spread from Nigeria to another part of the work,” the CBN boss said.
He further emphasised that the apex bank- through its various development finance intervention- has supported critical sectors in Nigeria to promote a homegrown balance and rebalancing of the economy.
This, according to Emefiele, has engendered self-sufficiency, adding that in the last 7 years, the CBN has injected over $8 trillion to support different sectors such as agriculture, manufacturing, and health education.
President Buhari, in his comment on the refinery project, described the facility as a significant milestone for Nigeria’s economy and a game changer for the downstream petroleum products market in the entire African region.
He revealed that the project was a clear example of what can be achieved when entrepreneurs are encouraged and supported and when an enabling environment is created for investments and for businesses to thrive.
He, therefore, expressed confidence that his successor, Asiwaju Bola Tinubu, will sustain the improvement in the country’s economic and business environment and strengthen the framework of Nigeria’s public-private partnership policies to accelerate the pace of our economic growth and development.
Buhari while commending Alhaji Aliko Dangote’s leadership in executing the 650,000 barrels per day refinery, urged other entrepreneurs to emulate his example in driving economic growth and realizing Nigeria’s economic potential.
He stressed the need for African countries to come together, integrate their economies, eliminate trade barriers, and rally their populations to achieve Agenda 2063 for the continent’s prosperity.
He noted that investment in these sectors has played a crucial role in shifting Nigeria from heavy import dependence to becoming a net exporter.
Buhari, therefore, disclosed that his administration has focused attention on creating an enabling environment for the private sector to thrive and fill the enormous gap in investments not only in infrastructure but also in all critical sectors.
Mele Kyari, Group Chief Executive Officer of the Nigerian National Petroleum Company Limited(NNPCL) said that Dangote Refinery will provide domestic security of supply in our country even as the country embarks on the full implementation of the Petroleum Industry Act.
According to him, the lingering challenges of petroleum subsidies are clearly getting out of the capacity of the state to bear and the differentials that domestic refining will provide are insignificant and cannot compensate for the subsidy.
He said, “It is very difficult to continue to bear subsidy bills in excess of 400 billion Naira every month.”
The GCEO further emphasised the commitment of the national oil company to the expansion of investment in the oil and gas industry, despite the global pressure against investment in hydrocarbon.
Kyari said, “The shock from covid 19 pandemic and the conflict in Europe are reminders that energy is not just a business but a vital component of national security. Reliable fair price energy is a key to domestic economic growth, job creation, and sustained democracy.
“As the world transitions to cleaning sources of energy due to climate change concerns, many developing countries in Africa and Asia are left to contend with managing the impact of climate change.
“Nigeria and Africa as a whole produce a small amount of carbon emission and profoundly suffer the consequences.
“NNPC as the supplier of last resort to the market will continue to encourage investors to develop hydrocarbon assets using the most modern and innovative technologies to realize the potential of our resources and empower the transition towards clean energy in decades ahead, “Kyari said.