Africa’s richest man, Aliko Dangote is set to add $2 billion to his investment in an oil refinery, petrochemical and fertilizer plant, according to the Financial Times.
While several companies are reconsidering their investment in the oil and gas sector due to declining oil prices, Dangote has increased his investment to $11 billion in the project, which could eventually revolutionise the energy sector of the country, as local refining of crude oil will increase. He had just over a year ago invested $9 billion in the project.
The chairman of the Dangote Group, who spoke to the Financial Times at his headquarters in Lagos, said the refinery and petrochemicals project is expected to be completed by the end of 2017. The new investment is aimed at doubling the production of polypropylene and adding the production of polyethylene, the two raw materials used to make plastics.
Although Nigeria’s economy has been hit by falling oil prices, with the country’s currency recently devalued, Dangote said that the economic turmoil has not undermined the case for the investment in the country.
According to him, the Dangote Group, had already begun laying foundations outside Lagos, with nearly two-thirds of the initial foreign currency requirement needed already raised before the naira began to fall.
“The devaluation will increase our dollar costs. But most people in the oil business have slowed down or suspended projects. So I think we will get very good deals in terms of building. That will compensate,” he said.
He acknowledged that the broader economic impact of the falling oil price was a concern, but may also be a blessing in disguise for the country, as it will encourage speedy diversification of the economy, “especially when it comes to foreign exchange earnings.”
“We as a group had seen this coming,” he said. According to Dangote, by the time the plant is ready, “we won’t require a single dollar from the Central Bank of Nigeria,” which has partly financed the project, “With our export-orientated goods, including cement, fertiliser and petrochemicals, we will be earning as much as $9 billion annually.”
Dangote also explained that the government will be the biggest gainer from the project. “We won’t make our money back for five to six years. If I deploy that capital in buying blocks to sell oil even with the falling oil price, we could recover the money in three to four years. So the real beneficiary is the government,” Dangote said.