Dangote Seeks Billions to Bolster Crude Supply for Landmark Refinery
Africa’s richest man, Aliko Dangote, is ramping up efforts to secure billions of dollars in funding to sustain crude oil supply for his $20 billion refinery near Lagos, Nigeria. According to the Financial Times, the industrialist is in talks with commercial banks, development institutions, oil traders, and other stakeholders to finance crude procurement.
The Africa Finance Corporation (AFC), a Nigeria-based pan-African development financier and an existing investor in the refinery, is reportedly leading the charge in this effort. In December, the AFC spearheaded a financing round to support the refinery’s commercial launch, though it has declined to comment on current discussions.
Scaling Up Operations
Since its partial launch earlier this year, the refinery—dubbed the largest of its kind globally—has begun producing 420,000 barrels per day (bpd), with plans to reach its full capacity of 650,000 bpd by mid-2025. Dangote Industries has sourced crude from the U.S. and Brazil and is negotiating with African suppliers, including Libya and Angola, to secure additional supply.
The refinery has already started producing jet fuel and naphtha, with petrol output commencing in September. Industry experts believe this development could significantly reduce Nigeria’s dependence on imported petroleum products.
Financial and Operational Hurdles
To sustain operations, Dangote requires approximately $2 billion every three months to secure a minimum crude supply of 300,000 bpd. However, ensuring consistent crude availability remains a major challenge.
Investors have also raised concerns about crude supply stability and currency risks. Nigeria’s naira has sharply devalued following recent currency adjustments, amplifying financial uncertainties. “The refinery may never make a profit in real terms,” one banker told the Financial Times, citing the over-budget construction costs and the naira’s depreciation.
Government Support
Last month, Dangote held an emergency meeting with President Bola Tinubu and Mele Kyari, CEO of the Nigerian National Petroleum Company Limited (NNPC), to finalize crude supply arrangements. Following the meeting, the NNPC agreed to supply 365,000 bpd to the refinery, with payments to be made in naira.
A “Game Changer” with Challenges
The refinery is widely regarded as a transformative project for Nigeria, addressing decades of reliance on imported refined petroleum despite being Africa’s largest oil producer. Dangote has been a vocal critic of this dependency, describing it as “absurd.”
While the refinery’s success is viewed as crucial for Nigeria’s energy independence, securing sustainable crude supply and navigating financial risks will be key to achieving its ambitious production targets
