Fitch Ratings has downgraded Dangote Industries Limited (DIL) due to what it says is the significant deterioration in the group’s liquidity position and uncertainty related to its ability to refinance maturing debt related to the syndicated loan raised to finance construction of Dangote Oil Refining Company (DORC).

Further delays in meeting the funding requirements would significantly increase the likelihood of financial restructuring or default and lead to further rating downgrade, according to Fitch.

“The downgrade reflects significant deterioration in the group’s liquidity position following lower than expected disposal proceeds, operational and financial underperformance compared to our prior expectations, also affected by local currency devaluation, and lack of contracted backup funding to repay its significant debt facilities maturing on 31 August 2024,” Fitch Ratings said in an update released Monday.

“We view the lack of DIL’s audited accounts for 2023 as a corporate governance issue.”

DIL has immediate debt servicing requirements related to the syndicated loan raised to finance the construction of Dangote Oil Refining Company (DORC).

Dangote Refinery has a nominal production capacity of 650,000 barrels per day (bpd) of refined oil products, which will be sold in both the Nigerian domestic and international markets.

During the First Half (1H) 2024 the refinery operated at around 50% capacity and produced between 325,000 bpd to 375,000 bpd.

“The EBITDA contribution from DORC has been far below our previous projection,” Fitch said.

Major currency devaluation in 2023, also caused the Dangote group to record a significant FX loss of N2.7 trillion in 2023 as the company faces a mismatch between USD denominated debt and domestic revenues. Fitch expects the devaluation to continue at a higher pace in 2024 leading to more losses.

The group plans to divest a 12.75% stake in DORC in 2024. The group intends to service its significant syndicated loan maturing in August 2024 from the equity divestment.

“However, timely divestment and meeting the imminent maturity is highly uncertain in our view,” Fitch said.

Fitch expects DIL’s EBITDA margins in cement production to drop further in 2024 following softer retail demand for cement particularly in the Nigerian market as well as limited ability to pass on increased raw material cost to consumers.

Fitch downgraded the National Long-Term Rating to ‘B+(nga)’ from ‘AA(nga)’ and senior unsecured debt rating issued by Dangote Industries Funding Plc to ‘B+(nga)’ from ‘AA(nga)’.

Fitch has simultaneously placed the ratings on Rating Watch Negative (RWN). The RWN reflects uncertainty related to the group’s ability to refinance maturing debt.

https://moneycentral.com.ng/exclusive/article/fitch-cuts-dangote-industries-on-worsening-liquidity-possible-default-on-refinery-debts/

If that refinery fails, many foreign investors will flee, even intending ones will have rethink. Imagine Nigeria does not have a single functional refinery

Look what Tinubu has done to a whole Dangote.
Losses everywhere.

No single profit.

Business challenges that will be resolved. Nigeria is a dangerous place to do business. Imagine borrowing at 900 per dollar and having to repay at 1650 per dollar. That is enough to kill any business.

The FG forex policy has put Dangote in a mess.

Dangote is a resilient giant; setbacks are part of the journey. The refinery will bounce back stronger, just watch! Let's support our own and hope for better days ahead. Our economy needs this.

This is the biggest mistake of the Tinubu government!

Dangote will lose a lot of money but he has a voice in the international and local business community

Foreign investors will be looking from a distance knowing that if you could do it to your own, then you will do it to them, and no investor wants to lose money like that, there are other viable options around the world begging for their attention. Already they lost 60% of their investments when Tinubu announced the floating of Naira

Hmm

Some people just want to see Dangote fail, but this man is a titan. Watch him turn this around and prove them all wrong!

'Ebidta contribution from Dangote Oil Refinery has been FAR BELOW our previous expectation'.

In layman's language, it means the refinery is not as profitable as expected.

On top of that, there is imminent debt repayment around the corner.

Mr Dangote is in a bit of trouble.

Now I understand why he has been unusually agitated in recent months.

The thing with refineries all over the world is the margins (profit) are usually very small.

It is a tough business to be in, especially if you have to compete with imports from other refineries.

I suspect Mr Dangote assumed he would have the entire Nigerian market to himself so that he would have more flexibility to dictate price.

With the government not buying into that agenda, he will find himself in a tough competition.

That's even before government 's own refineries start producing. The government will be under pressure to sell at a cheaper price, and Dangote refinery may not be able to compete.

We wait and see how all these play out.

givedemwotowoto:
This is the biggest mistake of the Tinubu government!

Dangote will lose a lot of money but he has a voice in the international and local business community

Foreign investors will be looking for a distance knowing it could be them next. Already they lost 60% of their investments when Tinubu announced the floating of Naira

I don't see why you think the President should be blamed.

You mean he should have granted Dangote refinery the sole and exclusive right to sell petrol and diesel in Nigeria?

Do you know any country in the world where a private company is the sole supplier of refined petroleum products?

What do you think would happen to the price of rice if only one private company has the right to sell rice in Nigeria. We will all be at the mercy of that company as it will increase prices as it pleases.

I am sure you would be amongst those who would turn around and blame the President for putting the control of sale of rice in the hands of a single company.

You people blame the President for everything.

DeLaRue:


I don't see why you think the President should be blamed.

You mean he should have granted Dangote refinery the sole and exclusive right to sell petrol and diesel in Nigeria?

Do you know any country in the world where a private company is the sole supplier of refined petroleum products?

What do you think would happen to the price of rice if only one private company has the right to sell rice in Nigeria. We will all be at the mercy of that company as it will increase prices as it pleases.

I am sure you would be amongst those who would turn around and blame the President for putting the control of sale of rice in the hands of a single company.

You people blame the President for everything.

Let’s say what you claimed here is true and Dangote wanted to be sole distributor of refined petrol, did he also tell that if they didn’t grant it, he won’t buy crude from them?

Why did they refuse to sell crude to him and instead choose to export crude and import refined petrol from Malta when there’s a refinery in their country?

Why does Dangote have to go to other countries to buy crude when the country produces crude? And why did they start propaganda that he was selling dirty petrol if their hands in the matter are clean. Didn’t he invite them?

Where are you people getting all these useless stories from corrupt politicians?

That you even believe these people who have kept your country where it is today is puzzling to any sane mind

givedemwotowoto:
This is the biggest mistake of the Tinubu government!

Dangote will lose a lot of money but he has a voice in the international and local business community

Foreign investors will be looking for a distance knowing it could be them next. Already they lost 60% of their investments when Tinubu announced the floating of Naira

but Dangote has said himself he is not owing any foreign banks and all that's left of his loan is 2.5Billion dollars owed to local banks which he will pay back before the end of the year......so why are dragging Tinubu and the country?

leokid866:
but Dangote has said himself he is not owing any foreign banks and all that's left of his loan is 2.5Billion dollars owed to local banks which he will pay back before the end of the year......so why are dragging Tinubu and the country?

Let us see what he’ll tell the north after trying to destroy Dangote’s business

Do you know the chain of businesses the dantata family have created in the north?

You just decided to frustrate a hard working businessman’s business after collecting over N100 billion naira from him to build a refinery your country has wasted so much money but couldn’t build and maintain

Goodluck with investors after trying to frustrate your own

givedemwotowoto:


Let us see what he’ll tell the north after trying to destroy Dangote’s business

Do you know the chain of businesses the dantata family have created in the north?

You just decided to frustrate a hard working businessman’s business after collecting over N100 billion naira from him to build a refinery your country has wasted so much money but couldn’t build and maintain

Goodluck with investors after trying to frustrate your own

how has Tinubu frustrated Dangote? Long before Tinubu became president he has supported Dangote by creating an enabling environment for him in Lagos so where are you people getting the Narrative that Tinubu is behind Dangotes woes? Even in Dangotes fight against NNPC it was still Tinubu that went to settle the fight so stop spreading trash Narratives I beg.....

lordm:
If that refinery fails, many foreign investors will flee, even intending ones will have rethink. Imagine Nigeria does not have a single functional refinery

Why will dangote refinery work ? Do you want the ones we built outside Nigeria with stolen public funds to fail ?

leokid866:
how has Tinubu frustrated Dangote? Long before Tinubu became president he has supported Dangote by creating an enabling environment for him in Lagos so where are you people getting the Narrative that Tinubu is behind Dangotes woes? Even in Dangotes fight against NNPC it was still Tinubu that went to settle the fight so stop spreading trash Narratives I beg.....

They collected N100 billion from him and then tried to frustrate him.

Immediately he mentioned Malta and tried to expose their asses, and even start doing business abroad and forget Nigerian market, their hands were forced and felt defeated. That’s why they’re trying to sell to him now

Let’s see what story he’ll tell them that will earn him any support. They will collect his money and do him shege

givedemwotowoto:


They collected N100 billion from him and then tried to frustrate him.

Immediately he mentioned Malta and tried to expose their asses, and even start doing business abroad and forget Nigerian market, their hands were forced and felt defeated. That’s why they’re trying to sell to him now

Let’s see what story he’ll tell them that will earn him any support. They will collect his money and do him shege

This very funny situation can lead to a regime change The current government is set to sabotage Dangote

APC is a curse on Nigeria.
The destruction that Buhari could not do, Tinubu has done.
NNPC is gone, all the refineries are dead, now Dangote is down and about to be swallowed by Tinubu's disastrous failure.
Northerners would rather chase Tinubu out of Aso Rock than for Dangote to go down.

Fitch can say what they want, but Dangote is a master at navigating challenges. With his track record, I believe he’ll find a way to turn this situation around. The refinery is too vital for Nigeria’s future to fail!

Salewa97:
Fitch can say what they want, but Dangote is a master at navigating challenges. With his track record, I believe he’ll find a way to turn this situation around. The refinery is too vital for Nigeria’s future to fail!

650k bpd refinery is just too big a behomoth for a country like Nigeria. I believe bua was more prudent in cutting his refinery capacity to 240k bpd. Dangotes idea was to dominate the sector with his refinery. Someone told me he wanted an oil lifting license, and thats assuming he becomes the sole oil supplier to nnpc, that'd enable him import petrol whenever his refinery is shutdown for maintenance or repairs. Dangote baulks under the pressure of competition. How he'll turn this economic hellhole he has found himself in is yet to be seen.

givedemwotowoto:


Let’s say what you claimed here is true and Dangote wanted to be sole distributor of refined petrol, did he also tell that if they didn’t grant it, he won’t buy crude from them?

Why did they refuse to sell crude to him and instead choose to export crude and import refined petrol from Malta when there’s a refinery in their country?

Why does Dangote have to go to other countries to buy crude when the country produces crude? And why did they start propaganda that he was selling dirty petrol if their hands in the matter are clean. Didn’t he invite them?

Where are you people getting all these useless stories from corrupt politicians?

That you even believe these people who have kept your country where it is today is puzzling to any sane mind

Guy you fall hand. I read your post. And his reply wasn't to what you said.

He forced a narrative on you, and instead of pointing it out, you fell for his gimmick.

There is nowhere in your post you referred to making dangote the sole supplier of refined petroleum products. He made that up and forced it upon you, and you just took it.

givedemwotowoto:


They collected N100 billion from him and then tried to frustrate him.

Immediately he mentioned Malta and tried to expose their asses, and even start doing business abroad and forget Nigerian market, their hands were forced and felt defeated. That’s why they’re trying to sell to him now

Let’s see what story he’ll tell them that will earn him any support. They will collect his money and do him shege

where are you getting these half truths from? who collected 100 billion from Dangote? And the Malta issue is about those in NNPC who are importing from Abroad a Ministry and it's affiliates been run by the Hausas like him....do if anyone is even trying to frustrate him it's his own people.....all this was before the President weighed in and signed an executive order that a certain percentage of crude produced must be kept for local consumption.....

CorrectionFLuid:


Guy you fall hand. I read your post. And his reply wasn't to what you said.

He forced a narrative on you, and instead of pointing it out, you fell for his gimmick.

There is nowhere in your post you referred to making dangote the sole supplier of refined petroleum products. He made that up and forced it upon you, and you just took it.

His point was that they tried to frustrate Dangote because he wanted to be a monopoly. It's a narrative Agbados started bringing up in their own defense. If you watched Dangote's interview a couple weeks ago, he also brought up the issue of him being called a monopoly and debunked the allegation. This Agbado is not the first Agbado to allege that, to which the ending part of my post called nonsense.

givedemwotowoto:

Where are you people getting all these useless stories from corrupt politicians?

That you even believe these people who have kept your country where it is today is puzzling to any sane mind

Salewa97:
Fitch can say what they want, but Dangote is a master at navigating challenges. With his track record, I believe he’ll find a way to turn this situation around. The refinery is too vital for Nigeria’s future to fail!

We shall see!!