According to a new report, Africa’s richest man, Aliko Dangote, lacks the funds required to complete his refinery by 2023.
According to Fitch, the world’s largest global rating agency, the Nigerian billionaire needs an additional $1.1 billion (900 billion) to complete the refinery but has invested all of his money and even borrowed to finance the project.
The Dangote refinery project, according to the report, is still on track to be completed by 2023 and will require an additional USD1.1 billion in capex in 2022, which will be partially funded by the new bond.
According to the report, Dangote Industries Limited (DIL) intends to establish a USD750 million local bond program to partially finance the completion of its refinery and petrochemical plant. Under the proposed program, DIL’s subsidiaries – Dangote Oil Refining Company Limited (DORC) and Dangote Fertiliser Limited (DFL) – will be co-obligors.
Fitch also stated that Dangote Industries has poor corporate governance, and that it is a risk for Dangote, who already has a lot of power over operations, to remain the project’s largest shareholder and CEO.
In the report, Fitch said, “DIL has a complex group structure with a large amount of related-party transactions, with a negative effect on operational and financial transparency. We also view the dominance of Aliko Dangote, as CEO and the main shareholder, in operations as an additional risk.”
Fitch concluded its report by saying that the refinery project is expected to sustain strong margins and yield solid cash generation, adding diversification to DIL’s profile and allowing rapid deleveraging.
“Once operational, we expect this project to contribute around USD1 billion to EBITDA annually when ramped up from 2024,” it added.
