Dangote Group recently secured a $3.3billion loan with a syndicate of local and foreign banks to fund the construction of 400,000 barrels per day refinery and petrochemical plant in South-West Nigeria. The banks include Access, Diamond, Ecobank, Fidelity, First Bank, FCMB, GTB, StanChart, UBA and Zenith. Others are FirstRand Bank and Standard Bank of South Africa.

Going by Dangote’s record and reputation, the project’s success can be assumed. This will effectively break a twenty year jinx that prevented the realization of private refineries in Nigeria inspite of several licenses and government MoUs with foreign investors.

Interesting posers
- Is there a tacit government support for the refinery project going by the presence of the Vice President at the ceremony and subsequent visit to Aso Rock after signing?
- Is there a likelihood of complete removal of subsidy on or before the take-off date of the refinery in 2016?
- Are the existing public refineries doomed to a fate similar to NITEL? Their value will surely nose dive when Dangote’s refinery commence production and possibly leading other serious investors to also build more private refineries?
- How might the supposed “subsidy cabal” react as Dangote’s refinery will meet more than 50% of our local consumption?

Key lessons
- When there is a will there will be a way. For over twenty years a number of companies were given licenses to build refineries, till date not one has been built. The main excuse being subsidy and government control of petroleum prices.
- Banks and financiers prefer to put their money in too-big-to-fail projects. Virtuall all Nigeria's biggest banks and some of South Africa's are backing the deal.
- Success begets success. There is no doubt that Dangote’s track record and success in previous ventures is the main reason the banks are backing the project even though government has not stated that subsidy will be removed.
- It takes just one man to make a change.

Kudos to Dangote for this innovation. However, we must keep in mind that the first few years heralding privatisation of these refineries and de-subsidizing of petroleum products will be harsh on us and leave a real bitter taste in our mouth. But it would heal over time, as soon as other foreign investors are convinced the government no longer control the pump prices. Then we may be buying a litre of fuel for #20. It will take time, yes, but it will happen.. After all, 10 years ago, who believed one could get phone lines for free, and recharge #100 airtime to get #500 extra and free data now??
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