Dangote’s outlines 50yr investments plan to spur Nigeria’s industrial, Economic growth

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Aliko Dangote is the chairman and CEO of a company that is building a $12bn oil refinery © Bloomberg

Africa’s richest man and Nigerian business magnate, Aliko Dangote has outlined a five year investment plan that that will spur industrial and economic growth in the country.

Dangote who disclosed this at a presentation to business leaders/CEO’s at the Lagos business school last week, said the group has planned over $20 billion investment for Nigeria that will help drive key infrastructural growth and improve economic activities.

“Dangote Group has an investment pipeline of over $23bn for Nigeria. Refinery, gas pipeline (EWOGGS), fertilizers, upstream oil and gas, rice production, sugar backward integration, cement projects and power are expected to gulp certain percentages of the investments,” Dangote, Chairman Dangote group said.

“Of the $23 billion investments in the works, $11 billion will go to refinery, $3 billion to the gas pipeline (EWOGGS), $2.2 billion to fertilizers, $2 dollars to power, and $1.8 billion to upstream oil, $1.3 billion to cement projects, $1 billion to rice production and $1 billion to sugar backward integration.”

“The EWOGGS pipeline project will significantly improve gas supply security for use by power plants, fertilizer production and other industrial factories as current national supply is put 1,000 mscfd.”

With a capacity of 3,000mscfd of gas and covering a distance 550 km from Bonny in the Niger Delta to the Lekki Free Trade Zone in Lagos, the EWOGGS pipeline project will supply Nigeria enough gas to generate 12,000 MW of power.

The project’s feasibility and concept selection study is now completed and currently at the detailed engineering phase. Geophysical (route) survey and geotechnical survey are equally in progress, Dangote said.

However, access to Foreign Exchange (FX) to fund equipment purchases, payment for offshore services and securing reliable, long-term gas supply to the pipeline which often requires high investments and long lead times on the Exploration and Production Company’s side has been identified as major challenges confronting the project.

The project will complement existing gas supply system in Nigeria like the Escravos-Lagos Gas Pipeline System (ELPS), West African Gas Pipeline (WAGP) and stimulate investments by International Oil Companies (IOC) and other gas asset holders to develop their fields; increasing supply and reducing flaring.

According to Dangote “the group is growing rapidly with revenues expected to grow by more than 7 times in the next 5 years from $4 billion to $30 billion.”

“The group is also driving 6 major projects which will provide FX earnings and savings of $15.5billion. The projects include refinery and petrochemical, fertiliser, sub-sea gas pipeline, local rice production, local sugar production and cement capacity expansion and are expected to create over 290 thousand jobs in Nigeria.”

The refinery and petrochemical project is the single largest refinery in the world with a 650,000 bpd refining capacity sited on 2100 hectares of land located at the Lekki Free Trade Zone.

The refinery according to Dangote will ensure fuel sufficiency for Nigeria but challenges the project faces include logistics for delivery of oversized cargo to the site from the ports, access to FX to fund equipment purchases and payment for offshore services, among others.

Dangote told the gathering of key players in the Nigerian business space that when completed, the project will earn $6bn from exports and save the country about $6bn per annum of FX expended in imported petroleum products.

With a 3million tons of Urea per Year (3MMTPA) and investment worth $2billion the fertilizer project, will contribute to national food security and sufficiency for Nigeria.

However, Dangote identified implementation of the largest ammonia and urea ultra-modern fertilizer complex in the world at a single location with related maintenance and operation support facilities as a major constrain for the project.

On the agriculture and agro processing component of the multi-billion dollar type investment, the rice and sugar projects have a targeted capacity of 1m MTPA milled parboiled rice capacity and 1.5M MTPA refined sugar respectively. The tomato and diary project are also expected to form a significant component of the project.

On power, the group has signed a $5billion Memorandum of Understanding (MoU) with Blackstone Group to invest in energy infrastructure in sub Saharan Africa and is also actively pursuing the development of power projects in Kano (Nigeria), Togo and Benin Republic.

Dangote noted that the group’s strategy include; identifying sweet spots, executing efficiently, operating effectively, and forming strategic partnerships, and human capacity.

The Dangote group is the largest conglomerate in West Africa and one of the largest on the African continent that has grown from a commodity trading company to a diversified conglomerate over the last two decades.

The Groups listed companies account for about 35-40 percent of Nigerian Stock Exchange (NSE) market capitalization.

The group has invested over $7bn in the last 15 years largely in the manufacturing sector which is almost 10 percent of the total Foreign Direct Investment (FDI) inflows of $77.12 billion which was mainly channelled into the oil and gas sector between 2013 and 2016.

Of the $7 billion that has been invested, the Obajana cement plant contributed the most with some $2.5 billion investment, followed by Ibese Cement plant with an investment of $2 billion.

Investment in transport came next with a $1bn investment while investment in Gboko cement plant, Dangote sugar and other investment (Dangote Flour Mills and NASCON) stood at $750 million, $520 million and $290 million respectively.

The group’s revenue in 2016 was equivalent to 11 percent of the manufacturing sectors contributions to the Gross Domestic Sector, based on data from the National Bureau of statistics.

The group has also contributed immensely to scaling up employment opportunities in the country, spending closely N2 billion yearly on corporate social responsibilities (CSR) as over 1,000 persons (engineers, technicians, artisans) have been trained by the Dangote Academy with 70 percent absorbed into the Group.

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