Market News

Dangote refinery to start producing petrol, diesel by 2020 - BUSINESSDAY

NOVEMBER 07, 2018



Aliko Dangote, Africa’s richest has said that the oil refinery he is building in Lagos designed to process 650,000 barrels a day of crude, should start producing fuel in the first quarter of 2020 and be at full capacity within six months of that year. “We will ramp up very quickly,” Dangote told Bloomberg in an interview at the New Economy Forum in Singapore. “There are so many challenges but we are going very fast.” With Nigeria a country of almost about 200 million people currently consuming  roughly 35 million litres’ of petrol daily; Dangote’s Refinery facility is expected to produce about 50 million litres’ a day of petrol which implies the refinery will have about 15 million litres of excess output for export. 

The long awaited London listing of Nigeria’s largest company, Dangote Cement plc is also scheduled for September 2019, according to Dangote. Dangote said he is waiting for Nigeria’s election in early 2019 and for a sell-off in emerging markets to pass before starting an Initial Public Offering (IPO) of Dangote Cement Plc. “The planned listing of the Dangote Cement shares on the London Stock Exchange by way of an IPO is another welcome development for investors both local and international given the giant strides made by the firm over the years in deepening its presence across the markets where it operates,” Gbolahan Ologunro an Equity Research Analyst at CSL stockbrokers, a subsidiary of FCMB Group said in an emailed response. Ologunro said the London IPO will not only provide the company with much-required funds for its continued expansion, it will also increase its recognition in the global construction market, enhancing the ability of the company in becoming a top global construction materials company.

 Adetola Adelu, Financial Analyst at Fides Capital Partners said the basic reasons why a company launches an IPO, is to raise fresh capital, which will boost the company’s expansion, broaden its investor’s base and create more investors’ confidence which in turn will make their share price rally. The company had approached investment banks about arranging the IPO, people familiar with the matter said in February.

The share sale could raise about $1 billion, they said, adding that the cement maker is more likely to raise that much cash in London than Lagos due to the deeper pool of investors. Dangote cement’s revenue grew to N685 billion in the nine month 2018 period, compared to N603 billion in 2017. Gross margin which is a way of measuring the amount of profit a company can make from its revenue stood at 55.59 percent in Q3. Dangote cement has 45.6Mta capacity across 10 countries and with a market capitalization of N3.49 trillion. About 15 percent of its stock is already listed in Nigeria Stock Exchange (NSE) and its shares closed trading at N205 on Tuesday. Also in a separate interview with Bloomberg, Dangote said Africa’s largest Cement producer is in talks about a potential acquisition of a company with operations in Kenya and Tanzania although he didn’t give the name of the company.

 



by ANI MICHEAL & DIPO OLADEHINDE

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