By John Ikani
American credit rating agency Fitch Ratings says Nigeria’s richest man Aliko Dangote needs about $1.1 billion (N900 billion) to complete his refinery in Lagos.
It alleged that his company, Dangote Industries has limited financial flexibility with which to complete its refinery.
In May, Fitch Ratings released a company overview for the company, revealing that Mr Dangote invested all of his money and borrowed additional funds to finance the project.
The credit rating agency revealed that Dangote Industries Limited was planning to establish a local bond worth $750 million to partially fund the remaining part of the project.
“Funding for the completion of the refinery project is expected to be partly covered by proceeds of the new bond,” stated the Fitch report.
It further detailed that the refinery’s existing creditors will not be able to give the organisation the amount needed for the completion of the project “if the transaction is not successful or should completion cost overrun or market conditions in the cement or urea deteriorate materially.”
Fitch went on to argue that Dangote Industries suffers from weak corporate governance.
It says that the existence of a “complex group structure with a large number of related-party transactions” has “a negative effect on operational and financial transparency.”
“We also think it’s a risk that Aliko Dangote, as CEO and main shareholder, has a lot of power over operations,” it added.
Dangote, originally a cement tycoon, is worth $20.4 billion, according to the Bloomberg Billionaires Index.
The billionaire had promised to commission the $19 billion refinery project before President Muhammadu Buhari’s tenure ends next year.
Not only is the Dangote refinery very dear to Buhari’s government, Fitch claims that the government sees the project as the messiah that will solve Nigeria’s perennial fuel scarcity problem as it will end the country’s dependence on imported foreign fuel.
The facility has an installed capacity of 650,000 barrels per day. Its output will be more than enough to meet Nigeria’s fuel demands and turn Africa’s largest crude producer into an exporter of refined crude.
But as it turns out, Fitch seems to think that this dream and the time line Dangote gave Buhari is not achievable.
Fitch concluded its report by saying that the earliest Dangote refinery can deliver its project is 2024 and not the 2023 that Dangote promised Buhari.
The Dangote refinery project has gone too far and Dangote, is racing against time just to make sure that he delivers the project.
If not for anything, a lot of hopes are tied to the project, and its failure to deliver will be nothing but a catastrophe.