Dangote rejects $3bn loan, plans to set up trading arm for mega refinery

 

Africa's richest man Aliko Dangote has turned down proposals from BP, Trafigura and Vitol among others to offer him over $3 billion loan as working capital the refinery needs to buy large amounts of crude.

The promoters of the comapnies have met Dangote in Lagos and London in recent weeks to make the offer.

The traders asked the refinery to repay loans with fuel exports but so far they have signed no deals as Dangote worries they would reduce his control of the project – and potentially his profit, the sources said.

Dangote has also met state-backed firms in his search for cash and crude.

As part of the alternative to the loan arrangements, Dangote is planning to set up an oil trading arm, likely based in London, to help run crude and products supply for his new refinery in Nigeria, sources familiar with the matter have disclosed.

The move would reduce the role of the world's biggest trading firms, which have been negotiating for months to provide the refinery with financing and crude oil in exchange for products exports. The giant 650,000 barrel-per-day refinery is set to redraw global oil and fuel flows and the trading community is closely watching the way it will operate.

Dangote, whose wealth is estimated by Forbes at $12.7 billion, did not reply to several comment requests.

"He is going to try and do it himself," an industry source said adding that the new trading team will be led by ex-Essar trader Radha Mohan.

Mohan joined Dangote in 2021 as director of international supply and trading, according to his Linkedin profile. Two sources said the team was in the process of hiring two new traders.

The refinery took nearly a decade to complete -- and came in at a cost of $20 billion, some $6 billion over budget.

The plant has refined around eight million barrels of oil between January and February and will take months to get to full capacity. So far, Vitol has prepaid for some product cargoes to help the refinery buy crude, while Trafigura has swapped some crude oil in exchange for future fuel cargoes, sources with knowledge said. Geneva-based Vitol and Trafigura declined to comment.