AMCON sets eyes on Dangote refinery as liabilities swell
Africa’s biggest oil refinery and the world’s largest single-train facility, Dangote Oil Refinery may run into a deep financial crisis from rapidly increasing interests amounting to millions of dollars, indicating a possible takeover of the project by the Assets Management Corporation of Nigeria (AMCON).
Dangote Oil Refinery, a 650,000 barrels per day (BPD) integrated refinery project under construction in the Lekki Free Zone, Lagos, Nigeria, was expected to commence production in 2016 with $3.3billion financing secured in 2013.With the refinery now projected to commence operations in 2025, Dangote Group’s indebtedness to the financial institutions is estimated to hit $8.4billion by 2025. Presently, this debt burden has risen to 7billion dollars with debt servicing of almost 700million dollars per annum.
The completion date of the refinery had been moved eight times. Whilst some might say this is not in the character of dangote Industries and their numerous projects across different sectors, the problem is deeply rooted, MMS reports.A contractor at the delayed refinery project, speaking under the condition of anonymity, said that poor planning, underpayment of contractors, and a lack of proper project management with over 40 contractors on site has led to most of the delays. He also added that of the 40, none is willing to commission as there is no clear delegation of duty and over-decentralization leading to absolute chaos.With these incessant delays, some financing banks are already calling in their loans amid fears of a liquidity crisis, while others are elated by the guarantee of huge interests to be recouped as soon as the refinery comes on stream.Dangote has been able to restructure the facilities from various local and international banks twice so far, most banks have totally refused to restructure for the third time with principal repayment also falling due as well as the annual interest payments.The Nigerian National Petroleum Corporation (NNPC) has made available $3.8billion as part of the federal government’s 20% equity in the project, providing $1billion cash, while the remaining $2.8billion will be in crude supply.
