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Africa’s Richest Man Bets Large On Oil Refinery

LAGOS, Nigeria—Africa’s richest man sat barefoot on his new yacht in a lagoon here after one other night of about three hours sleep.

The day was filled with meetings about his cement company and preparations for a polio-combating trip with fellow billionaire Invoice Gates. His BlackBerry buzzed every few minutes with messages from the president of Benin, and a former U.S. ambassador wished some face time.

“You do not see any sign of stress on me,” Aliko Dangote stated with a tight smile. The 56-yr-previous businessman mentioned he was getting an vitality enhance from a weeklong fast that limits him to six glasses of watermelon juice a day.

For two many years, Mr. Dangote (pronounced DAHN-go-tay) has turned his relentlessness, connections and entrepreneurial bets on the rise of Africa into a fortune estimated at about $22 billion.

Most of it comes from his controlling stake in a conglomerate of cement, sugar, salt and noodle factories sprawled across sixteen countries. Earnings in three publicly traded firms he controls hit $1 billion in the first nine months of 2013, up forty three% from a 12 months earlier.

Mr. Dangote now has a plan to quintuple his wealth—and grow to be one of many five richest individuals on the earth. He will spend $9 billion to build the largest privately owned refinery in Nigeria, which produces more oil than any other African nation however must import a lot of the motor gas and diesel it makes use of as a result of present refineries are dilapidated and inefficient.

Inside about two years, the brand new refinery in a stretch of swampy shoreline outdoors Lagos might start piping in crude from roughly 7 miles offshore, bypassing a site visitors jam of tankers typically stuck for weeks. Competing towards 4 authorities-managed refineries that run at barely 20% of their capacity, Mr. Dangote would double the nation’s maximum refinery output.

The refinery mission is a bet that Africa’s economic system will keep rising a lot faster than the rest of the world, particularly as a wave of consumerism sweeps the continent.

New airways are taking off so shortly that some jet-gasoline sellers, hurt by a scarcity, have been caught attempting to fill airplane tanks with kerosene as a substitute. Automobile imports by means of Nigeria’s foremost port have risen to about 300 vehicles a day.

Consequently, Africa now is the world’s quickest-growing oil consumer, and the International Vitality Agency expects oil consumption in Africa to surge about 30% to four.5 million barrels a day by 2018. The bounce represents 15% of the world’s projected rise in oil demand.

Mr. Dangote and his supporters, including Nigeria’s president, see more than cash in the brand new refinery. To them, it also defies centuries of Africa exporting its most precious resources—including gold, diamonds and oil and gas refinery jobs in singapore humans—rather than putting them to work at dwelling.

Nigeria’s government has collected about $1.Three trillion in oil revenue since 1980, based on the Economist Intelligence Unit. But about 60% of the nation’s 170 million folks reside on lower than $1 a day, based on the federal government. It says as much as 400,000 barrels of oil per day—or one-sixth of complete output—are pilfered from pipelines by bandits. gasification A lot of the stolen crude is loaded onto barges at night and shipped abroad.

The refinery planned by Mr. Dangote will “change the economic and industrial panorama of Nigeria,” stated Doyin Okupe, senior special assistant to Nigeria President Goodluck Jonathan. The president thanked the billionaire and his bankers by inviting them to Mr. Jonathan’s villa on a day normally reserved for government planning classes.

The mission faces daunting challenges. Competitors might be fierce from U.S. Asian and European firms that additionally wish to fulfill Africa’s thirst for gasoline and different gas merchandise. Some vitality firms are expanding operations in Africa, and American refineries are gaining an edge around the globe as the U.S. shale-oil growth lowers their production prices.

Nigeria additionally subsidizes imported oil, protecting prices at the gasoline pump about one-third decrease than they’re within the U.S.

“I do not understand how he’s going to do it, but I do know it’s going to be very, very robust,” stated Bismarck Rewane, managing director of Financial Derivatives Co. a analysis agency in Lagos. He has known Mr. Dangote since they lived near one another in the 1980s and attended center-of-the-night time home events together.

Regardless of all his connections, Mr. Dangote hasn’t received government approval for a license wanted to build the refinery. That’s not unusual. From 2000 to 2010, more than 100 refinery building projects were introduced in Africa. Just one was constructed, in response to consulting firm Citac Africa Ltd. Others usually fell sufferer to political interference or high borrowing costs.

“We’ll get it,” Mr. Dangote stated about the license. The ministry reviewing the license utility declined to comment. Nigeria’s next presidential election is scheduled for 2015.

In an interview on his yacht, named Mariya after his mother, the billionaire stated his refinery will haven’t any hassle competing because it would avoid Nigeria’s pricey and congested ports. He hasn’t mentioned if it can sell gasoline to retailers for lower than they pay now.

He additionally expects Nigeria to eventually abolish foreign-oil subsidies, which value the government $6.5 billion final year.

Prior to now decade, Africa’s economy has grown by a mean of 5.6% a 12 months, compared with the world-vast growth fee of three.6% per year, according to the Worldwide Financial Fund. The surge has helped flip a number of the richest businessmen in Africa into tycoons.

Africa now has 27 billionaires, up from sixteen in 2012 and just two a decade ago, in keeping with Forbes magazine. Those two were white South Africans.

Mr. Dangote was born into wealth. Near the dawn of British colonialism in the early 1900s, his nice-grandfather, Alhassan Dantata, cornered the peanut market in drought-prone northern Nigeria. While other Nigerians chafed at colonial rule, Mr. Dantata exported tons of peanuts to feed Europe’s rising appetite.

During the oil growth of the 1970s, an uncle of Mr. Dangote gave him a government-issued license to import cement. But few Nigerians had ever heard of him. Mr. Dangote spent a lot of his time and earnings in Brazil, normally having fun with the Carnival festival before Lent. Within the nineteen nineties, a pal talked him into flying to Atlanta, the place he purchased a house and then swung by each other month for jaunts at nightclubs.

He felt comfy amid Atlanta’s historically black faculties and restaurants, far away from a succession of army coups and botched elections in Nigeria. Startled by a snake in his basement sooner or later, Mr. Dangote sold the house and bought a bigger one.

However he started to really feel the tug of his homeland, essentially the most populous nation in Africa. On journeys to Brazil for Carnival, he saw signs of the economic progress the country had made: Desperate hustlers, touts and money changers did not swarm him on the airport any extra. And cement factories had been popping up within the mountains.

That gave him an idea to do something massive, he mentioned. He flew again to Nigeria, contributed to the upstart Individuals’s Democratic Celebration and made a promise after its presidential candidate won election in 1999. Mr. Dangote vowed to construct one of the world’s largest cement plants if the government restricted the flow of cement through the country’s ports.

The businessman obtained what he wished. The bounds on imports of cement—the commonest constructing material in Africa—lifted prices to twice the world-large common. His business empire mushroomed. Dangote Group now makes a two-thirds markup on each bag of cement it sells.

In return, Mr. Dangote spent $1 billion on the cement factory and an adjoining, 1.7 mile-lengthy airstrip, borrowing a few of the money at an interest fee of 42%. They opened in 2008, and he vaulted onto the billionaires’ checklist for the first time.

Dangote Group now employs about 25,000 folks in Nigeria, is constructing cement factories in 14 countries in Africa and is buying mining licenses from Kenya to Zambia.

A pop tune in Nigeria called “Aliko Dangote Particular” contains the line “Cowl of Forbes, he no be joke.” The motivational e book “Dangote’s Ten Commandments on Cash” cites the billionaire’s advice “to make the best of your time because any time lost can’t be regained.” No. 8: “Believe in Nigeria.”

“It’s something he mentioned to me years ago: ‘Solely Africans will construct Africa,’ ” mentioned Kola Karim, chief government of oil-exploration firm Shoreline Pure Sources Ltd. Mr. Karim sells many of the oil from Shoreline’s fields within the Niger River delta to India however would quite do enterprise with Mr. Dangote.
The 2 men, who are buddies, just lately talked over the main points on a dock next to the billionaire’s yacht however haven’t introduced an settlement. “This is the place my future lies,” Mr. Karim stated. “The market is in Africa.”

Mr. Dangote will quickly borrow $1.5 billion to lease about 740,000 acres, an area 50 occasions bigger than Manhattan. He desires to develop sugar and rice for Dangote Group’s processing plants.

The area in northeastern Nigeria is swarming with fighters from Islamic insurgency Boko Haram, but the fields will put so many people to work that the insurgents will “go away us alone,” Mr. Dangote predicted. Once the farm is thriving, “Boko Haram won’t have guys to recruit.”

The industrialist nudged Nigerian bankers for greater than a 12 months about his refinery plans. Then he started telling them how a lot they should lend—and at what interest rate.

“When he desires one thing, he gets it,” said Edmund Boyo, a partner at regulation agency Clifford Probability LLP who labored on the deal.

In September, Dangote Group introduced a $3.Three billion syndicated loan from banks led by Standard Chartered of the U.Ok. and Nigeria’s Guaranty Belief Financial institution PLC. Terms of the $three.Three billion mortgage weren’t disclosed, though he said it includes a penalty if he repays the banks too quickly.

Nowadays, banks typically cost him lower than 6% curiosity, he added, a decrease curiosity price than Nigeria’s government will get on its loans.

Yvonne Ike, chief government of investment bank Renaissance Capital’s operations in western Africa, said she has seen bankers’ “eyes watering when they considered how much they’d lent” to Mr. Dangote at rock-backside interest charges in contrast with different corporations. Nonetheless, the bankers “couldn’t stand not to be part of the largest debt deal in Africa,” she said.

Mr. Dangote now is trying to line up oil to feed his refinery. Chevron Corp. CVX -1.85% and Royal Dutch Shell RDSB.LN +1.92% PLC are selling oil fields alongside Nigeria’s coast after lengthy battles with kidnappers and pipeline-bombing oil thieves.

The billionaire wants to buy the two corporations’ tracts of oil-wealthy swamp. To guard the oil from bandits, he will bury pipelines to and from the refinery. Chevron and Shell declined to remark.

The billionaire hasn’t introduced any offers to sell the gasoline, plastic and different gas products that might be made by his refinery.

He possible will have to lure away clients from state-owned oil firm Nigerian Nationwide Petroleum Corp. It controls the 4 rundown refineries that dominate Nigeria’s oil trade. Authorities leaders have denounced the corporate as opaque oil and gas refinery jobs in singapore and unscrupulous.

“It is a waste pipe of corruption,” mentioned Ken Saro-Wiwa Jr. a spokesman for Mr. Jonathan, Nigeria’s president. An NNPC spokeswoman could not be reached for remark.

Mr. Dangote hasn’t had a trip since he took 18 kids, grandchildren, nephews and nieces to Walt Disney World in Florida final yr. That was his first trip in 17 years, and he has no plans for an additional one. The refinery is maintaining him too busy.

“If there may be something larger than the national honor that the president gave me two years ago, which I do respect very a lot, then he obviously needs to present me another nationwide honor for constructing a refinery that we never, ever dreamt about,” he stated.

The billionaire’s personal jet was touchdown in Lagos at 1 a.m. last month when his pilot bought a name from air-traffic controllers. Mr. Gates, the Microsoft Corp. co-founder and one of the world’s richest men, had simply spent two days with Mr. Dangote however was stranded 400 miles away by a damaged-down plane.

Mr. Dangote told his pilot to show round, pick up Mr. Gates and fly again to Lagos. Mr. Dangote received home at four a.m.