AfDB Approves USD 300 million Loan to Boost Fuel Supply and Fertilizer Production in Nigeria
The Board of Directors of the African Development Bank (AfDB) approved on 13 June 2014 a loan of USD 300 million to Dangote Industries Limited for the construction and operation of a greenfield crude oil refinery and a greenfield fertilizer manufacturing plant.
Both projects will produce for consumption in Nigeria and neighboring African countries. The project will allow Nigeria, which currently relies on imported petroleum products and fertilizer, to progressively become self-sufficient and transformed into a major exporter. Ultimately, the project will act as a catalyst to support job creation.
The oil industry in Nigeria contributes a large share to gross domestic product and accounts for the bulk of federal government revenue and foreign exchange earnings. The country is the first crude oil producer in Africa, with a production close to 2.2 million barrels per day. Paradoxically, the country is a big importer of refined petroleum products for its economy as well as fertilizer products. The Dangote Group was established in the late 1970s and started with importing sugar, milk, flour, fish, rice, cement and iron rods. The Group is now a diversified conglomerate with business interests in cement, sugar, salt, port operations, packaging material production and real estate.
The projects will add value to local natural resources, double the country’s refining capacity, reduce by more than 80% current imports of fuel in the country and eliminate fertilizer imports. The projects are expected to help Nigeria on forex savings of $ 65 billion through import substitution and provide revenues for FGN (taxes and fees).
The projects will also create over 30,000 temporary jobs during construction, and 2,900 direct jobs during operations. The projects will compliment Bank’s ongoing effort to support FGN for the implementation of the Agriculture Transformation Agenda (ATA).