Ahead of the official commissioning of the largest refinery facility in the world in Lagos, Nigeria on Monday, Alhaji Aliko Dangote has opened up on what led him to the gigantic project and his late entry into the oil business.
In an interview in Vanguard, Dangote also explained how the decision of the Umaru Yar`Adua government to reverse the sale of two refineries made to him by the Olusegun Obasanjo government led him to the Lekki, Lagos refinery project.
“Well, let me tell you why we had to go into oil. Our strategy was to be an African company. When you look at the other options, it’s agriculture — and agriculture doesn’t take that much money. We always invest most of our money back into the business, so when we looked at it in 2015 and projected our revenue for the next few years, we looked at what we had left after investing in fertilizer and realized we still had billions of dollars we could put somewhere else.
“The only place we could invest that much money was in the oil and gas business. So the refinery takes those dollars and allows us to invest in something we are used to, which is industry. The majority of people here made their money through oil. But we have never dealt with oil, which is to prove that you don’t have to be in oil. In Nigeria, oil has damaged our thinking.
“Everyone is thinking about oil, oil, oil. And we are one company that has made a success without doing that. Also, people always say, “Oh, he’s in oil and gas—there’s a lot of corruption in oil and gas.” We didn’t want to be a part of that. There are a lot of friends of mine in oil, and they are doing the right things. But I didn’t want to be a suspect, so that’s why we didn’t go into oil earlier.
Why go so big?
“In business, you need to know before you jump into something. You have to do quite a lot of homework. For instance, Nigeria’s refineries were privatized in 2007. We bought two, but after a few months, we had a new government that decided to void the transaction.
So, since 2007, we’ve been working on building our refinery, but we didn’t finally start something until 2015. Here the capital investment are huge—much larger. And if you are not a big player, you have no way of survival”
Dangote on the journey to building the largest refinery in the world said:
“We had already studied doing 300,000 barrels a day back in 2005. At that time I couldn’t even fathom a larger refinery. I had no financial capacity. Then in about 2010, we paid up Dangote Group’s debts, which amounted to $2 billion, and then started accumulating cash. When we decided to build the refinery of our dreams, we reviewed our plans again and put the figure at 400,000. Then it jumped up to 650,000bpd. So a refinery had been on the drawing table for years, but this is how we were able to finally push it through.”