Nigerian billionaire businessman and industrialist, Aliko Dangote, has lamented the loss of $500 million by his conglomerate following the delay in getting a site for the Dangote Petrochemical Facility within the botched Olokola free trade zone in Ogun State.
The Daily Crucible reports that Olokola, a coastal area in Ode Omi in Ogun Waterside Local Government was conceived to to host a deep seaport project by the administration of Otunba Gbenga Daniel.
It was equally planned to have Olokola Free Trade Zone (OFTZ) and Olokola Liquefied Natural Gas(OKLNG) scheme. The seaport was to serve as a multipurpose facility and export processing zone. The site when fully utilised by investors – foreign and locals, was also expected to generate over 100,000 direct and indirect jobs and boost the IGR base of Ogun State.
Dangote Group and some multinational oil firms, including Exxon Mobil, were companies said to have indicated interest in Olokola project but the scheme was abandoned in 2011 by the succeeding administration hours after Daniel left office.
Dangote originally planned his petrochemical and refinery plant to be sited in the Olokola Free Trade Zone that stretches from Ode Omi in Ogun State to a section of Ondo State but the alleged prevailing interest and politics at the time during the administration of Senator Ibikunle Amosun frustrated Dangote Group out of the envisaged site until Olokola scheme became moribund.
But speaking on Sunday, July 14, during a media tour of his Refinery in Lagos, Dangote attributed the significant financial loss to the protracted process of acquiring Olokola land for a petrochemical facility.
According to him, the move encountered disappointment and bureaucratic hurdles that significantly impacted the project timeline and overall costs, and eventually engendered $500 million cost on the $2.5 billion initial drawdown on bank loans.
“The biggest challenge we had actually was Ogun State. For three years and half years we could not have access to Olokola land, we had eight eight months battling with the Ogun State Government to have access to the land. You know when you are building a complex like this you need the land to do the soil test and do other tests before you can even start your drawing. You need to know what kind of foundation you are going to have, is it pilling, is it raft foundation or just normal foundation?
“Unfortunately, we couldn’t agree with the Ogun State Government and that delay cost us over $500million because the money was attracting interest and our money – $2.65bn, was in an escrow account while there was no interest at all. From there we jumped into Lagos and bought the land from the Lagos State Government.”
“The three years and eight months delay by Ogun State government over Olokola land for petrochemicals facility costs us $500m,” Dangote said.
The Africa’s richest man, however, disclosed that a total of $25bn investments have been made in petrol refinery and fertilizer plant by the Dangote group in the last 10 years.
According to BusinessDay,
Data sourced from the National Bureau of Statistics (NBS) revealed that foreign investors shunned Ogun, Osun and 31 other states as Lagos, FCT, and Ekiti were the ones attracted to investors with each recording $2.78 billion, $593.58 million, and $12.7 million respectively.
The then Governor Babatunde Fashola-led Government of Lagos State seized the lapses in Ogun and quickly opened the door of Lagos to Dangote Group. The evidence of that step today is the Dangote Petrochemical Facility in a free trade zone inside Ibeju Lekki area of Lagos State.
He also disclosed that the Nigerian National Petroleum Company (NNPC) Limited now owns a 7.2% stake in the Dangote Petroleum Refinery, and not the initial 20% stake as announced before the inauguration of the facility.
Dangote explained that NNPC’s stake slumped to 7.2% due the company’s failure to pay the balance of their share, which was due in June. The NNPC had acquired a 20 per cent interest in the $20bn Dangote refinery for $2.76 billion.
“NNPC no longer owns a 20 per cent stake in the Dangote refinery. They were met to pay their balance in June, but have yet to fulfil the obligations. Now, they only own a 7.2% stake in the refinery,” Dangote said.
On the more cheering side, he revealed that the conglomerate is targeting around $30 billion in revenues by the year 2025 while also projecting to emerge the largest supplier of foreign exchange in the FX market in the future as well as striving to become independent of the CBN in terms of forex sourcing.
He noted that the group planned to shift its revenue composition in the cement business from the current 75% to 15% in the future, even as he emphasized on plans to balance revenue from EBITDA, moving it from a 80% Nigerian base to 50% foreign based.
The group also envisaged that hard currency revenue will account for 90% of its total revenue.
The Group’s revenue according to the presentation in 2022 stood at $5.4 billion. This means the Group targets a 455% increase in revenue between 2022 and 2025.
He said, “What we are trying to do is to totally get ourselves out of the demand of foreign exchange from the Central Bank of Nigeria (CBN) and be the biggest supplier of foreign exchange in the foreign exchange market.
“So, 75% of our revenue used to come from our cement business and 80% of our EDITDA is from Nigeria and 90% of the revenue comes from various local currencies which is a high risk. So 15% of the revenue going forward will come from cement from 75% and 50% of our EBITDA will come from outside Nigeria including exports and 75% of the revenue will be in hard currency.”
