International Energy Agency (IEA) reports indicate that Nigeria’s current crude oil demand is 260,000 barrels with about 80% import which really makes business difficult. Nigeria has been known as Africa’s largest crude oil producer but not now. Fuel shortages now seems to be a recurrent problem for Africa and in view, Nigeria and Africa’s richest man seems to have interest in investing towards the oil and gas sector. Sourcing money from the World Bnak’s private sector arm, the central bank, other foreign funds and local banks, Aliko Dangote is expecting to commence operations at the oil refinery by the first quarter of 2019. Meanwhile, mechanical completion of the refinery is scheduled for 2018.
In recent times, Aliko Dangote has faced multiple industrial low performance. He actually mentioned in a recent interview with Reuters. Devaluation of the Nigerian currency had affected a number of businesses and trade in Nigeria. According to Aliko Dangote, this has caused a surge in production cost and almost affecting cost of all sector of business operation.
The devaluation of the Naira happened recently after the central bank laid off whatever thing which was keeping the Naira at an official rate of 197 for a whooping sixteen month period. The devaluation is estimated at almost thirty per cent following a free trade of the currency on the interbank market. He added that the devaluation alone has cost his company more than 176 million USD. Under the Dangote sugar refinery, there has been a 15 per cent reduction in production capacity which is tied to the fall of the local currency – Dangote mentioned that the refinery actually owed a reasonable amount of money due to the dollar crisis. Additionally, under cement production, The Dangote Cement Industry incurred about 100 million USD at monthly basis. Dangote mentioned that these costs was expended on recurring purchase of production materials and operating 9,000 trucks under the cement industry.
But for great entrepreneurs, fall in business performance means larger investment into potential-profitable sectors. The business tycoon has announced plans to invest an estimated 12 billion USD into the oil and gas sector. The 12 billion USD crude oil refinery is expected to have a total capacity of about 650,000 barrels – a good estimated production to meet Nigeria’s demand. The refinery plant will also poses a fertilizer unit which is worth 2 billion USD which is funded by export credit agencies, loan and Dangote’s own equity.
Also, Africa’s richest man declared that his investment is on the brighter side based on the fact, gas is priced in dollars and therefore, if devaluation should occur then that represent an opportunity for his price to boost at an equal rate. That is, in the gas sector, the recent 30 per cent devaluation represented a reflection of 30 per cent shoot up in prices and almost all sides of business. To add up, Aliko Dangote has also revealed his plans to set up a gas pipeline all through West Africa; noting that Nigeria is listed as the 9th country with largest gas reserves (about 187 trillion cubic feet).
From cement, pasta, sugar refinery, to flour, the Dangote group is now on the light side to make name in the oil and gas sector after making huge plans to expand operations in already existing countries like Ghana and Nigeria; while starting new cement production yards in Niger, Ethiopia, Cameroon, Mali, Zambia, and Senegal in the next two years.