Aliko Dangote, President of Dangote Industries Limited, has stated that the cost of building his 300,000-barrels-per-day refinery exceeded initial estimates due to naira depreciation, dollar shortages, and rising financing pressures.
Speaking during a visit by Nigeria’s Creative Industry to the Dangote Petroleum Refinery, Petrochemicals and Fertiliser, Dangote noted that the project started without a detailed budget, relying instead on estimates from staff members with experience in building refineries elsewhere.
He explained that the exchange rate shifted from about N136 to the dollar at the project’s inception to N1,650 during construction.
This created significant pressure because the company’s income base was in naira, whereas its expenditures and loans were denominated in dollars. These financial difficulties were further compounded by lender skepticism, as others had claimed the refinery would never be completed.
To secure financing, he noted that the company had to pledge its assets as collateral, and banks also demanded Dangote’s personal guarantee, which exposed his personal possessions to potential recovery action if the project failed and pledged assets proved insufficient.
He stated that the loan amount was between $3.5 billion and $3.7 billion, and the company ultimately relied on balance sheet financing rather than project financing.
Despite mounting financial pressures, the billionaire businessman remained determined to finish the project, noting that abandoning construction was not an option once substantial resources had been committed.
Other major challenges encountered during construction included the COVID-19 pandemic, foreign exchange constraints, and the extensive preparation of the refinery site, which required raising the location with 65 million tonnes of sand due to concerns that it could be submerged in the future. Even after completion, operational difficulties persisted, including problems with gas turbines that delayed power availability for more than 1,000 days.
Reflecting on the experience, Dangote encouraged young Nigerians to pursue ambitious goals and remain committed despite setbacks.
He shared that his own ambitions at age 20 did not prepare him to imagine a project on this scale, and he urged young people to set bigger goals in fields like entertainment and music.
To illustrate how ambitious projects can initially face opposition, Dangote cited Ethiopia’s airport development plans.
He noted that while Ethiopia’s prime minister’s proposal for an airport handling 20 million passengers annually was initially considered a bad idea by most involved, the airport now handles 26 million passengers, and another airport designed for 108 million passengers is currently being developed.
According to Dangote, this demonstrates the importance of pursuing ambitious projects despite initial doubts and opposition.
