The Nation Newspaper

Tag: Dangote

  • Nigeria spends $1.8b yearly on rice import, says Dangote

    Nigeria spends $1.8b yearly on rice import, says Dangote

    • Launches Rice Outgrowers Scheme

    Africa’s richest man and President, Dangote Group, Alhaji Aliko Dangote has lamented that Nigeria spends nearly $1.8billion per year importing (approximately 3.2 million) metric tons of rice to feed its population.

    He said this huge foreign exchange (forex) would have been used on more impactful social development interventions if they were not needed for food imports.

    Speaking during the launch of the Dangote Rice Outgrowers Scheme in Jigawa State at the weekend, he  said the nation’s  agricultural commodities and food imports bills averaged over N1trillion in 2013 and 2014, with foods such as sugar, wheat, rice, fish accounting for 93 per cent of the total cost of imports.

    He described the situation as unacceptable for anyone who loves the country.

    To check the the unncessary waste of forex on food importation, the Dangote Group has made investment in the agrci sector to create jobs and assure food security in the country.

    The Rice Outgrowers Scheme was launched in Hadejia, Kafin-Hausa Local Government Area of Jigawa State.

    Starting with 20,000 hectares of rice cultivation to be expanded to cover 800, 000 hectares over the next three years, Dangote said there was no better time than now to turn to agriculture to save the  economy.

    The scheme started  with the distribution of treated rice seedling for planting to some 5000 farmers.

    He said: “We are committed to the development of outgrower scheme by providing local, value added products and services that meet the ‘basic needs’ of the populace. To this end, the Dangote Rice Farm Ltd, will run an initial pilot in Hago-Fadama, Kafin Hausa and Auyo areas which would see Dangote Rice developing small hold farmers by providing quality inputs (certified seeds, fertiliser, agro-chemicals and petrol), improved agricultural practices and technology to increase yield and produce quality rice paddy which would also be bought back from them by Dangote Rice Limited.

    “The programme in Jigawa State is expected to create more than 10,000 direct and indirect jobs to the host communities.”

    Aside the outgrowers aspect of the investment, he said Dangote Rice is planning to plant approximately 150,000 hectares  of long grain white rice and produce near one million tons of high quality par boiled white rice for sale into the market.

    Furthermore, he said the internal policy within Dangote Rice Ltd is to procure 30 per cent of rice production from local farmers who will be developed into outgrower groups. According to him these outgrowers will be simultaneously developed alongside the company’s commercial farming operations.

    Dangote said before the discovery of oil, the economy was built around potentials from palm oil, ground nut, cotton, and rubber plantations. “Now the price of oil has plummeted from a peak of $116 per barrel in June 2014 to as low as $29 per barrel in January this year. This means there is huge loss of revenue to the government,” he said.

    Currently the average yield of rice in the country is between 1.8 to 2.5  metric tone per hectare (MT/ha), depending on the region and the crop (wet or dry) and with or without irrigation 1.8 MT/ha, which is significantly lower than the best practice yields in Africa of 9.2 MT/ha generated in Egypt. Locally produced rice is more expensive than imported rice due to the high cost of production relative to the low yields in the country because of poor agronomic practices.

    In addition, the Federal Government has implemented policy incentives that encourage investment in domestic rice production and milling.

    Dangote disclosed that the Dangote Rice Outgrowers Scheme was designed as a one stop solution for the rice value chain.

    In his remark during the rice seedling distribution, Minister of State for Agriculture, Senator Heneiken Lokpobiri lauded the initiative of Dangote, saying the intervention in the government efforts at providing food security for the citizenry, creating jobs and reducing dependence on food importation is appreciated by being boosted.

    According to him, so much forex is spent on importation of food items that could be produced locally.

    While expressing the government readiness to provide all the needed support to make the Dangote Rice Outgrowers Scheme a success, the minister said the government is putting in place a strategy that will make farmers have greater access to farm implements to help them produce with ease.

    Also speaking the Special Adviser to Alhaji Dangote on Rice and Coordinator of the Outgrowers Scheme, Mr. Lulu Carlos explained that 6.1million metric tone (mmt) of rice is consumed annually but not more than 2.6 million metric tons are produced locally leaving the rest to importation.

    Lulu said: “We are happy to start today the partnership with the First Out Growers bloc of 200 hectares, shared among 8 communities. I have seen the same project grow in my country, Brazil, whereby from 2.5 Mt tons in the beginning to today where we reached 9 tons of paddy rice per hectare in productivity.

    “This has transformed our country (Brazil), from a net importer of Rice in the year 2000 to a neýt exporter in the year of 2009.   This was achieved through a big out grower scheme in the rice region, which today involves thousands of independent farmers responsible for 80 per cent of the 12 million tons locally produced rice and a small number of large Commercial farms supplying the remaining 20 per cent.

    “Also, Alhaji Aliko, has   instructed me to conduct the project here for at least 30 per cent from out growers and 70 per cent from our commercial farm to be established in the state. But this is not our limit. We are today convinced that this equation will have more and more out growers participation in the future, due to very good and welcome response we are getting from all the communities we are dealing with.

    “We are bringing to the people top quality seeds, fertilizers and chemicals as well the training and teaching the best and most modern agriculturalý practices, to enable you to boost your productivity and quality of your rice. We are also committed to roll out the scheme to cover another 1,000 hectares for the coming rainy season in June / July, using the experience of this 1st plot to guide our progress.”

    The Jigawa State governor, Alhaji Badaru Muhammed Abubakar thanked the Dangote Rice Limited for choosing Jigawa as the pilot state for the project. He pledged the readiness of his administration to provide all necessary support to the project.

    He said, the project was part of his government’s commitment to improve agriculture and industrialize the state for job creation and poverty eradication. “Right from my inaugural speech, I made it clear that, agriculture was one of my government cardinal points and we are ready to collaborate with private investors in achieving the desire goals.

    “The project we are launching today is one of the numerous projects we intend to embark in collaboration with private investors from within and outside the country and we have already signed memorandum with many of them,” the governor said.

    The governor then assured Dangote Group of the state government’s support in making any policy and intervention that will make the investment profitable and generate jobs for the teeming population of the state.

     

  • Nigerian, South African regulators approve Dangote, Tiger Brands’ acquisition deal

    •Former Dangote Flour Mills to revert to former name, Dangote

    All appeared set for the return of former Dangote Flour Mills (DFM) Plc, now rebranded Tiger Branded Consumer Goods (TBCG) Plc, to its former name and its founding majority shareholder, Alhaji Aliko Dangote’s Dangote Industries Limited (DIL).

    Reliable sources in the know of the transaction said regulatory authorities in Nigeria and South Africa have approved the deal between TBCG’s majority core investor, South Africa’s Tiger Brand and the second major shareholder, DIL to sell Tiger Brands’ majority equity stake to DIL.

    Dangote Group’s DIL had in 2012 sold 63.35 of its equity stake in DFM to Tiger Brands in a $181.9 million deal. The deal saw transfer of 3.17 billion ordinary shares out of Dangote Group’s 3.67 billion ordinary shares of 50 kobo each in DFM to the Tigers Brand. The deal then was approximately valued at more than N28 billion, according to prevailing exchange rate.

    After nearly four years of successive losses and impairing of assets, Tiger Brands reached agreement with DIL on December 11, 2015 to resell the troubled flour-milling company to DIL.

    The sources said the Securities and Exchange Commission (SEC), Nigeria’s apex capital market regulator; Nigerian Stock Exchange (NSE), where TBCG is listed and all necessary South African regulatory agencies have approved the deal.

    The sources indicated that the transfer of the shares of TBCG from Tiger Brands to DIL would soon be done through the negotiated cross over window of the Nigerian Stock Exchange (NSE). The transfer of shares would subsequently be followed by the return of the company to its former name, which many stakeholders consider to be a stronger brand than the current name. The Dangote Group is the most capitalised quoted business group in Nigeria with four major companies including Dangote Cement, cement; Nascon Allied Industry, salt; Dangote Sugar Refinery, sugar; and TBCG, flour. It has several unquoted subsidiaries that are involved oil and gas, telecommunications, fruit drinks and transportation among others.

    The Nation had in late December 2015 exclusively reported the details of the acquisition deal. Under the deal, Tiger Brands Limited, South Africa’s largest food company, would divest its shareholding to Dangote Industries Limited (DIL), the holding company of Africa’s richest man, Alhaji Aliko Dangote.

    A report obtained by The Nation, which outlined the key details of the Share Sale Purchase Agreement (SSPA), indicated that Tiger Brands will transfer and sell its 65.66 per cent majority equity stake in TBCG to DIL for a nominal consideration of $1. The South African majority core investor will also absorb N15.76 billion in debts.

    It was the first report to outline the key financial considerations of the acquisition. TBCG has 5.0 billion ordinary shares of 50 kobo each with market capitalisation of about N5.9 billion.

    In consideration for the transfer of the 65.66 per cent equity stake to DIL, DIL will inject N10 billion in form of a convertible shareholder’s loan into TBCG in January 2016. The convertible loan implies that DIL, at its option, will automatically have higher majority equity stake whenever it decides to exercise its convertible option.

    “Tiger Brands Limited will transfer/sell its shares (3,283,277,052) to Dangote Industries Limited for a nominal amount ($1) in consideration for Dangote Industries Limited injecting N10 billion in January in the form of a convertible (at lender’s option) shareholders’ loan,” according to the report.

    Besides, “Tiger Brands Limited’s loan to TBCG of N10.25 billion will be extinguished by way of debt forgiveness to the company” and “Tiger Brands Limited will assume the Stanbic IBTC debt of N5.51 billion and pay up the outstanding amount due to the bank”.

    DIL has already given a guarantee of its continued financial support to TBCG for at least 12 months to stave off threats of liquidation facing the company.

    External auditors to TBCG- Akintola Williams Deloitte, had expressed worries that accumulated losses and continuing decline in operational performance that had wiped out shareholders’ funds could threaten the survival of the ailing flour-milling company.

    In the latest audit of the group, the external auditors noted that the group had accumulated losses of N23.1 billion and a negative equity of N3.1 billion by the year ended September 30, 2015. “These conditions indicate the existence of a material uncertainty which may cast doubt on the Group’s ability to continue as a going concern,” the audit report stated.

    Key extracts of the audited report and accounts of TBCG for the year ended September 30, 2015 showed that the group recorded a net loss after tax of N12.68 billion in 2015, a double on a net loss of N6.28 billion recorded in comparable period of 2014. Turnover had increased from N41.27 billion in 2014 to N48.03 billion. Gross profit also rose from N3.21 billion to N4.47 billion. But a combination of interest expenses, related party expenses and administrative costs continued to undermine the company’s performance. Operating loss rose from N6.43 billion to N8.58 billion. Loss before tax thus jumped to N12.47 billion in 2015 as against N9.29 billion in 2014.

    The group’s total assets declined from N54.8 billion in 2014 to N49.35 billion in 2015. Conversely, total liabilities rose from N45.19 billion in 2014 to N52.43 billion in 2015.

    A subsequent interim report on the company for the period ended December 31, 2015 showed some marked improvement, although it remained under loss and deficit was still about N4 billion. Turnover inched up to N10.672 billion by December 2015 as against N10.665 billion recorded in comparable period of 2014. Gross profit rose by 8.5 per cent from N1.17 billion to N1.27 billion. With foreign exchange gain of 962.4 million in 2015 as against forex loss of N1.29 billion in comparable period of 2014, operating loss reduced from N2.225 billion in December 2014 to N39.09 million in December 2015. Interest costs however rose from N761.53 million to N936.48 million. Loss before tax still reduced from N2.99 billion to N975.265 million while loss after tax reduced from N2.92 billion to N900.76 million. However, net assets was negative at N3.97 billion by December 2015 as against positive standing of N6.69 billion by comparable period of 2014.

    It should be recalled that Tiger Brands, which recently renamed the former DFM as TBCG, had in November 2015 announced that it would no longer extend funding to the struggling Nigerian subsidiary, in a major boardroom crisis that saw the exit of Alhaji Aliko Dangote and other Nigerian directors loyal to him from the board of TBCG.

    The repurchase agreement between Tiger Brands and DIL had generated controversy with some operators and shareholders expressing concerns on the propriety of the deal.

    DIL has defended the decision to “buy” back its former subsidiary on the need to prevent the company from going under and save over 3,000 jobs of Nigerians.

    While some stakeholders have questioned the rationale behind the investment decision by DIL, sources close to the Dangote Group said the company had to consider the repurchase of TBCG so as to keep the company as a going concern, which preserves value for the minority retail shareholders. The move also secured direct employment for over 3,000 employees.

    “Going by every indication, the future of the company was very doubtful and that was risky for the employees which are over 3,000 Nigerians apart from others who benefit from the company’s services through other ancillary services. The return of DIL is therefore a big relief and good decision to save the jobs of the staff of TBCG,” a Dangote Group source said.

    It should also be noted that Dangote Group’s companies are the main trading partners to TBCG, according to latest audit. DIL provides strategic management services while other Dangote Group’s companies provide wide-ranging services from haulage to packaging to raw materials and shipping among others.

  • Nigerian, South African regulators approve Dangote, Tiger Brands’ acquisition deal

    Nigerian, South African regulators approve Dangote, Tiger Brands’ acquisition deal

    •Former Dangote Flour Mills to revert to former name, Dangote

    All appeared set for the return of former Dangote Flour Mills (DFM) Plc, now rebranded Tiger Branded Consumer Goods (TBCG) Plc, to its former name and its founding majority shareholder, Alhaji Aliko Dangote’s Dangote Industries Limited (DIL).

    Reliable sources in the know of the transaction said regulatory authorities in Nigeria and South Africa have approved the deal between TBCG’s majority core investor, South Africa’s Tiger Brand and the second major shareholder, DIL to sell Tiger Brands’ majority equity stake to DIL.

    Dangote Group’s DIL had in 2012 sold 63.35 of its equity stake in DFM to Tiger Brands in a $181.9 million deal. The deal saw transfer of 3.17 billion ordinary shares out of Dangote Group’s 3.67 billion ordinary shares of 50 kobo each in DFM to the Tigers Brand. The deal then was approximately valued at more than N28 billion, according to prevailing exchange rate.

    After nearly four years of successive losses and impairing of assets, Tiger Brands reached agreement with DIL on December 11, 2015 to resell the troubled flour-milling company to DIL.

    The sources said the Securities and Exchange Commission (SEC), Nigeria’s apex capital market regulator; Nigerian Stock Exchange (NSE), where TBCG is listed and all necessary South African regulatory agencies have approved the deal.

    The sources indicated that the transfer of the shares of TBCG from Tiger Brands to DIL would soon be done through the negotiated cross over window of the Nigerian Stock Exchange (NSE). The transfer of shares would subsequently be followed by the return of the company to its former name, which many stakeholders consider to be a stronger brand than the current name. The Dangote Group is the most capitalised quoted business group in Nigeria with four major companies including Dangote Cement, cement; Nascon Allied Industry, salt; Dangote Sugar Refinery, sugar; and TBCG, flour. It has several unquoted subsidiaries that are involved oil and gas, telecommunications, fruit drinks and transportation among others.

    The Nation had in late December 2015 exclusively reported the details of the acquisition deal. Under the deal, Tiger Brands Limited, South Africa’s largest food company, would divest its shareholding to Dangote Industries Limited (DIL), the holding company of Africa’s richest man, Alhaji Aliko Dangote.

    A report obtained by The Nation, which outlined the key details of the Share Sale Purchase Agreement (SSPA), indicated that Tiger Brands will transfer and sell its 65.66 per cent majority equity stake in TBCG to DIL for a nominal consideration of $1. The South African majority core investor will also absorb N15.76 billion in debts.

    It was the first report to outline the key financial considerations of the acquisition. TBCG has 5.0 billion ordinary shares of 50 kobo each with market capitalisation of about N5.9 billion.

    In consideration for the transfer of the 65.66 per cent equity stake to DIL, DIL will inject N10 billion in form of a convertible shareholder’s loan into TBCG in January 2016. The convertible loan implies that DIL, at its option, will automatically have higher majority equity stake whenever it decides to exercise its convertible option.

    “Tiger Brands Limited will transfer/sell its shares (3,283,277,052) to Dangote Industries Limited for a nominal amount ($1) in consideration for Dangote Industries Limited injecting N10 billion in January in the form of a convertible (at lender’s option) shareholders’ loan,” according to the report.

    Besides, “Tiger Brands Limited’s loan to TBCG of N10.25 billion will be extinguished by way of debt forgiveness to the company” and “Tiger Brands Limited will assume the Stanbic IBTC debt of N5.51 billion and pay up the outstanding amount due to the bank”.

    DIL has already given a guarantee of its continued financial support to TBCG for at least 12 months to stave off threats of liquidation facing the company.

    External auditors to TBCG- Akintola Williams Deloitte, had expressed worries that accumulated losses and continuing decline in operational performance that had wiped out shareholders’ funds could threaten the survival of the ailing flour-milling company.

    In the latest audit of the group, the external auditors noted that the group had accumulated losses of N23.1 billion and a negative equity of N3.1 billion by the year ended September 30, 2015. “These conditions indicate the existence of a material uncertainty which may cast doubt on the Group’s ability to continue as a going concern,” the audit report stated.

    Key extracts of the audited report and accounts of TBCG for the year ended September 30, 2015 showed that the group recorded a net loss after tax of N12.68 billion in 2015, a double on a net loss of N6.28 billion recorded in comparable period of 2014. Turnover had increased from N41.27 billion in 2014 to N48.03 billion. Gross profit also rose from N3.21 billion to N4.47 billion. But a combination of interest expenses, related party expenses and administrative costs continued to undermine the company’s performance. Operating loss rose from N6.43 billion to N8.58 billion. Loss before tax thus jumped to N12.47 billion in 2015 as against N9.29 billion in 2014.

    The group’s total assets declined from N54.8 billion in 2014 to N49.35 billion in 2015. Conversely, total liabilities rose from N45.19 billion in 2014 to N52.43 billion in 2015.

    A subsequent interim report on the company for the period ended December 31, 2015 showed some marked improvement, although it remained under loss and deficit was still about N4 billion. Turnover inched up to N10.672 billion by December 2015 as against N10.665 billion recorded in comparable period of 2014. Gross profit rose by 8.5 per cent from N1.17 billion to N1.27 billion. With foreign exchange gain of 962.4 million in 2015 as against forex loss of N1.29 billion in comparable period of 2014, operating loss reduced from N2.225 billion in December 2014 to N39.09 million in December 2015. Interest costs however rose from N761.53 million to N936.48 million. Loss before tax still reduced from N2.99 billion to N975.265 million while loss after tax reduced from N2.92 billion to N900.76 million. However, net assets was negative at N3.97 billion by December 2015 as against positive standing of N6.69 billion by comparable period of 2014.

    It should be recalled that Tiger Brands, which recently renamed the former DFM as TBCG, had in November 2015 announced that it would no longer extend funding to the struggling Nigerian subsidiary, in a major boardroom crisis that saw the exit of Alhaji Aliko Dangote and other Nigerian directors loyal to him from the board of TBCG.

    The repurchase agreement between Tiger Brands and DIL had generated controversy with some operators and shareholders expressing concerns on the propriety of the deal.

    DIL has defended the decision to “buy” back its former subsidiary on the need to prevent the company from going under and save over 3,000 jobs of Nigerians.

    While some stakeholders have questioned the rationale behind the investment decision by DIL, sources close to the Dangote Group said the company had to consider the repurchase of TBCG so as to keep the company as a going concern, which preserves value for the minority retail shareholders. The move also secured direct employment for over 3,000 employees.

    “Going by every indication, the future of the company was very doubtful and that was risky for the employees which are over 3,000 Nigerians apart from others who benefit from the company’s services through other ancillary services. The return of DIL is therefore a big relief and good decision to save the jobs of the staff of TBCG,” a Dangote Group source said.

    It should also be noted that Dangote Group’s companies are the main trading partners to TBCG, according to latest audit. DIL provides strategic management services while other Dangote Group’s companies provide wide-ranging services from haulage to packaging to raw materials and shipping among others.

     

     

     

  • Dangote’s N20m scholarship lifts indigent students

    Dangote Cement PLC, Gboko, Benue State has given out N20 million worth of scholarships to indigent students from the firm’s host community, Mbayion, as part of its Corporate Social Responsibility (CSR).

    Presenting the scholarship at the Kings Hotel in Gboko, the Head, Human Resources and Administration of the cement firm, Mr Agustine Madu-Kibe, said the scholarships were for 2013 and 2014.

    Apart from the N10 million  yearly scholarships, Madu-Kibe said the firm has also provided health, water and education in the community.

    “Dangote has provided transformers, built classrooms for many schools within Mbayion Community and now building a coal plant to supply electricity to both the cement plant and by extension the community,” he said, urging the community to support the factory.

    Plant Director of the firm, Mr Jacinto Miranda said the firm provided the scholarships to ease the burden of parents on their wards.

    He also said the firm understands the community needs a lot of infrastructure, but appealed to them to be patient.

    Commissioner for Industry, Trade and Investment, Dr. Tersoo Kpelai praised Dangote Cement for being socially responsible. He also called on the firm to support research in  universities, especially mineral resources.

    He assured the firm of the Benue State government’s readiness to partner on investments.

    President, Mbayion Development Association, Ande Pev, appealed to Dangote Cement to increase the scholarships’ worth to N20 million yearly to enable students of higher institutions benefit.

     

  • Dangote slashes cement price

    Dangote slashes cement price

    As a result of its economy of scale occasioned by the recent introduction of new production lines in Okpella Edo State and Itori in Ogun State worth nine million  metric tonnes, Dangote cement has slashed the price of its cement varieties.

    In a statement, the firm stated that the price cut from N1800 to N1300 was to ensure the product is affordable to all segment of users.

    In the same light the company has gone a step further to train block moulders on the right mix to get quality blocks.

    Speaking in Umahia, the Abia State capital during a national meeting of the National Association of Block Moulders of Nigeria (NABMON), Regional Sales Director, Dangote Cement, Johnson Olaniyi, stated that Dangote Cement considered incessant building collapse as an indictment on all sector operators hence his company’s resolve to continue the collaboration with all so as to tackle the menace.

    While assuring that Dangote Cement would continue to ensure that block moulders have access to its quality cement as part of its contribution to the war against building collapse, the Sales Director  further stated that  the company reduced the price of its cement from N1800- N1300 to enable Nigerians have unhindered access to the product.

  • Polio: Gates, Dangote sign MoU with governors

    Polio: Gates, Dangote sign MoU with governors

    Bill Gates and Alhaji Aliko Dangote yesterday signed a Memorandum of Understanding (MoU) with seven North’s governors to eradicate polio and other diseases.

    The governors of Kaduna, Sokoto, Yobe and Borno entered into the agreement for the first time, while Kano and Bauchi governors had partnered Gates and Dangote under the auspices of the Bill and Melinda Gates Foundation and Dangote Foundation.

    Speaking at the event attended by six governors; United States Ambassador to Nigeria James Entwistle; Alhaji Aliko Dangote; Sultan of Sokoto, Alhaji Sa’ad Abubakar III; Shehu of Borno, Alhaji Abubakar Umar Garbai Elkanemi; Emir of Kano, Alhaji Muhammad Sanusi II, among others, Gates said his foundation was committed to polio eradication.

    He said the foundation, in partnership with the Dangote Foundation and Kano as well as Bauchi states, had  achieved results.

    Entwistle said the U.S. government would support both foundations to end vaccine-preventable child deaths.

    He said under the partnership, they would help Sokoto State to increase and sustain high immunisation coverage.

    The envoy hailed the state governments, saying: “This occasion demonstrates the willingness and commitment of your governments and organisations to tackle the challenges to achieve these goals.”

    Dangote urged the Federal Government to work with the states to provide routine, new vaccines and other items.

    Speaking on behalf of the governors, Kaduna State Governor Nasir Ahmad El-Rufai said although immunising a child should be simple, across the country, the health system was not invested with the capacity to provide routine services at a high standard.

    He, however, hoped the partnership would reverse the trend.

    El-Rufai thanked Gates and Dangote for the partnership  extended to the states.

  • Dangote: Fixing Nigeria’s chronic fuel crisis

    Dangote: Fixing Nigeria’s chronic fuel crisis

    After waiting on the queue for more than four hours to buy premium motor spirit, otherwise known as petrol in  Abuja, a taxi driver, Adebayo Olawole considered himself fortunate he got a half-filled tank. The day before, he got to the front of the line and was told there was none left.

    “I’ve not made any money in two days,” Olawole, 38, said outside a Total Nigeria Plc station in the Garki district. ”Today is my lucky day.”

    Fuel shortages are common in Africa’s largest oil producer, which imports the majority of its refined fuel, straining the nation’s finances and currency. Decades of poor maintenance, corruption and mismanagement have left Nigeria’s four state-owned refineries working at a fraction of their capacity.

    While the worst shortage in a decade almost caused the West African nation’s economy to shut down in May, with diesel-fired electricity and phone services on the verge of collapse, the situation has created investment opportunities for people including Africa’s richest man, Aliko Dangote, with a wealth of $14 billion, according to the Bloomberg Billionaires Index.

     

    Cement Business

    Dangote, who has made most of his money through his African cement business, is building a 650,000 barrel-per-day oil refinery and petrochemical plant in the commercial capital, Lagos, scheduled for completion by early 2018. The facility, with capacity to produce 55.2 million liters of gasoline daily, will produce other fuels as well as fertiliser and polymers, according to Devakumar Edwin, chief executive officer of the Dangote Group.

    “It’s a very large refinery. We can produce the entire gasoline requirements of the country,” he said.

    On completion the refinery would be the fifth-biggest in the world after plants in Venezuela, South Korea and India, according to data compiled by Bloomberg. It would also be the world’s largest single-train refinery, Dangote told reporters at the construction site on Jan. 10.

    “From Nigeria all the way down the coast to Senegal and all the countries in between, there’s almost no functional refinery except the one in Ivory Coast,” said Dolapo Oni, the Lagos-based head of energy research at Ecobank Transnational Inc. “Dangote is going to be able to plug that market.”

    The refinery in Ivory Coast has the capacity to process 65,000 barrels of crude daily, according to the website of the company, Societe Ivoirienne de Raffinage.

    Nigeria’s refineries have the installed equipment to process 445,000 barrels of crude a day, yet they operated at an average of 5 percent of that capacity in 2015, according to the state-owned Nigerian National Petroleum Corp. President Muhammadu Buhari’s administration has ruled out selling the assets, aiming to finance their revamp, even as government revenue has been cut by a more than 72 percent drop in oil prices since the 2014 peak, to an 11-year low. Oil accounts for two-thirds of Nigeria’s revenue and about 90 percent of foreign-currency earnings.

    Brent crude, which compares with Nigerian oil grades, rose 1 percent to $30.60 per barrel as of 3:19 p.m. in London.

    Price controls had cost Africa’s largest economy $35 billion from 2010 to 2014 and mainly benefited Nigeria’s elite, who consumed more fuel than the poor, according to a World Bank report. The cost of gasoline per liter in Nigeria currently stands at $0.43, compared with $0.74 in South Africa, $1 in Ivory Coast, $1.16 in Angola and $1.04 in neighboring Cameroon, according to the website globalpetrolprices.com.

    “If the government operates the subsidy regime, we can sell it to the government at the subsidised price,” Edwin of Dangote Group said. “If there is no subsidy regime, we’ll sell it directly to the distributors. So practically it is not going to affect our operations.”

     

    Foreign Income

    Central Bank of Nigeria Governor Godwin Emefiele, who was visiting the site, said the refinery could earn foreign income of $6 billion a year, helping ease exchange-rate pressures. He pledged to provide the Dangote Group the assistance it required to secure foreign exchange to complete the plant estimated to cost about $14 billion.

    The Abuja-based central bank has resorted to holding the naira at 197 to 199 per dollar since March by introducing trading curbs to conserve reserves and stem a rout after it fell to a record 206.32 in February.

    While Nigeria has more than 30 licenses issued for the building of privately owned refineries, Dangote is the first to start construction.

    If Dangote is successful, “it means that Nigeria can process more than its local fuel needs and also process on behalf of others so that we may start exporting refined products rather than exporting crude,” said Bismarck Rewane, chief executive officer of Lagos-based business advisory Financial Derivatives Co. Nigeria uses about 35 million litres of petrol per day, according to the NNPC.

    Buhari’s government insists there will be room for the state-owned refineries to operate alongside the private ones. Yet with the NNPC burdened by debt of about $5 billion owed to its joint-venture partners, it is unlikely to compete efficiently with private refineries, according to Ecobank’s Oni.

    The target is to “keep them consistently producing at above 90 percent of their capacity,” Emmanuel Kachikwu, petroleum resources minister of state, said in an interview on Tuesday in Abu Dhabi. “Simultaneous with that, I’m also going to be announcing a program, hopefully before the end of January, for others to come in and build new refineries.”

  • $14b refinery: CBN assures Dangote of Forex support

    $14b refinery: CBN assures Dangote of Forex support

    The Central Bank of Nigeria (CBN) has promised to assist the Dangote Group to access foreign exchange to facilitate its $14 billion refinery project.

    CBN Governor Mr. Godwin Emefiele said this yesterday during a tour of the refinery at its location within the Lekki Free Trade Zone in Lagos.

    The refinery is projected to refine 650,000 barrels of crude oil per day.

    Emefiele said the CBN support was to ease the importation of equipment needed to bring the Dangote refinery to reality.

    “Your $14 billion refinery investment will enjoy our support, no doubt.

    “We are doing this to fast-track the importation of equipment you need for a speedy completion of that project and to encourage other Nigerians to follow your lead,’’ Emefiele said.

    He added that the tour was aimed at lending the CBN’s support to the “project that will transform Nigeria’s downstream oil sector”.

    “The Dangote Group approached us to indicate their interest to invest in refining crude, such that petrol-chemicals, fertiliser and fuel will be produced.

    “Today, the three projects, which are valued at $14 billion (N2.8 trillion) are on course and this is highly commendable, ‘’ he said.

    Emefiele said the CBN would support tremendous and impactful projects to improve the socio-economic profile of the country.

    He said the diversification of the Dangote Group was worthy of emulation by other industrialists.

    “By the time this refinery is completed, it will not only service the needs of our domestic economy but shore up our international oil investments.

    “Projects like this and our support will encourage more Nigerians to begin to think like the Dangote Group,’’ the CBN boss added.

    Chairman, Dangote Group Alhaji Aliko Dangote said the refinery would begin commercial operations early 2018.

    His words: “We are set to unveil the world’s largest refinery which will make Nigeria self-sufficient in petroleum products refining and become a major exporter of oil.

    “This project will mark a turning point in Nigeria’s search for local refining of crude oil.

    “We will ensure the value chain in crude oil production is uplifted and other facilitators properly integrated into our scheme.”

    The chairman said the fertiliser production aspect of the refinery would be completed in 2017.

    Dangote said: “This project is generally about saving foreign exchange and earning more for our nation through diversification of the economy.

    “We started with local production of cement and today we export more than 12 tonnes.

    “We don’t need dollars now to continue to produce Dangote Cement and that is the same thing we will do with this refinery.

    “This refinery will have the capacity to serve this country optimally and it is part of our contribution in the vanguard to diversify our economy.”

  • Dangote, others make cover of new Maktoub magazine

    Dangote, others make cover of new Maktoub magazine

    The latest edition of Maktoub magazine, Nigeria’s leading international business and lifestyle journal hits the newsstands this weekend with exclusive reports, stories, interviews, news and trends on critical issues and topics on the economy and daily living.

    The bumper, New Year issue of Maktoub is headlined by Africa’s richest man, Aliko Dangote and his ambitious Pan-African investment drive across the continent. We take a wide overview of his vision and strides and what it means for the continent in a lead story titled, ‘Aliko Dangote: How He’s Leading Africa’s March to the Future.’

    This edition of Maktoub also features a revealing interview with Paul Orhii, the ebullient DG of NAFDAC as he discusses how agency is frontally taking on the anti-fake drug war with the latest technology and water-tight strategies.

    Maktoub’s new edition packs more excitement with must-read stories on our two ‘Man of the Moment’ personalities and corporate boardroom shakers: Nuru Adam and Dauda Lawal.

    The richly packaged issue completes with regulars like Personal Finance, Property & Investment, Klieglight, and Event News.

  • Dangote buys ex-subsidiary to save over 3,000 jobs

    Dangote buys ex-subsidiary to save over 3,000 jobs

    Dangote Industries Limited (DIL) has explained why it bought back its former subsidiary, Tiger Branded Consumer Goods (TBCG). It said its action is to prevent the company from dying and also save the job of over 3,000 Nigerians.

    DIL was approached by Tiger Brands to acquire its 65.7 per cent shares of TBCG Limited. While some stakeholders have questioned the rationale behind the investment decision by DIL, sources close to the Dangote Group said the company had to consider the repurchase of TBCG so as to keep the company as a going concern, which preserves value for the minority retail shareholders. The move also secured direct employment for over 3,000 employees.

    “Going by every indication, the future of the company was very doubtful and that was risky for the employees, which are over 3,000 Nigerians apart from others who benefit from the company’s services through other ancillary services. The return of DIL is therefore, a big relief and good decision to save the jobs of the staff of TBCG,” a market operator, who declined to be named, said.