Nigerian Industrial conglomerate Dangote Group has signed a loan agreement with a group of local and international banks to fund the construction of an oil refinery and petrochemicals plant in Olokola Free Trade Zone, Ondo State, Nigeria.
The $9 billion project cost will be financed by $3 billion in equity and $6 billion in debt.
Secured by Dangote, the $3.3 billion commercial bank tranche closed yesterday. The term loan facility was jointly co-ordinated by Standard Chartered, as global coordinator, and Nigerias Guaranty Trust Bank, as local coordinator. It was co-financed by a group of 12 local and international banks.
Access Bank, Zenith Bank, Ecobank Nigeria, Fidelity Bank, First Bank Nigeria, Standard Bank, UBA, FirstRand Bank, First City Monument Bank and Diamond Bank were the other participants on the transaction.
The facility has a tenor of seven years, a banker close to the deal tells Trade Finance. The loan represents the largest ever syndication by banks in Nigeria.
Dangote is now looking to raise $2.25 billion in debt from export credit agencies and development banks.
Expected to be completed in 2016, the project will have a refining capacity of 400,000 barrels of crude oil per day and will produce a variety of refined fuel products from local crude resources. The production will result in a 50% decline in the volume of fuel products imported by Nigeria. The 2.8 million tonnes of urea produced will be channelled into the West African agricultural sector. The plant will produce polypropylene for the local plastic and fabric products manufacturing sectors.
AlikoDangote, president of Dangote Group as well as Africas richest man, says: “This plant will further entrench Africas role on the global map as not only a valued contributor for natural resources, but also a competent manufacturer of refined products and fertilizer. As a result, several African nations will be less reliant on importing fuel and fertilizer from foreign markets, reducing the negative impact of negotiating terms within increasingly turbulent international markets.”