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Africa’s Richest Man Bets Huge On Oil Refinery

LAGOS, Nigeria—Africa’s richest man sat barefoot on his new yacht in a lagoon right 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-fighting journey with fellow billionaire Bill Gates. His BlackBerry buzzed every few minutes with messages from the president of Benin, and a former U.S. ambassador wanted some face time.

“You don’t see any signal of stress on me,” Aliko Dangote said with a tight smile. The fifty six-yr-old businessman mentioned he was getting an energy boost from a weeklong fast that limits him to six glasses of watermelon juice a day.

For 2 a long time, 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 16 nations. Profits in three publicly traded firms he controls hit $1 billion in the primary nine months of 2013, up 43% from a 12 months earlier.

Mr. Dangote now has a plan to quintuple his wealth—and turn into one of the 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 another African nation but must import a lot of the motor gasoline and diesel it makes use of as a result of current refineries are dilapidated and inefficient.

Within about two years, the new refinery in a stretch of swampy shoreline outside Lagos might start piping in crude from roughly 7 miles offshore, bypassing a traffic jam of tankers typically stuck for weeks. Competing against four government-managed refineries that run at barely 20% of their capability, Mr. Dangote would double the nation’s maximum refinery output.

The refinery challenge is a wager that Africa’s economy will keep rising a lot sooner than the remainder of the world, particularly as a wave of consumerism sweeps the continent.

New airways are taking off so rapidly that some jet-fuel sellers, harm by a shortage, have been caught making an attempt to fill airplane tanks with kerosene instead. Car imports by means of Nigeria’s major port have risen to about 300 automobiles a day.

In consequence, Africa now could be the world’s quickest-growing oil consumer, and the International Power Agency expects oil consumption in Africa to surge about 30% to 4.5 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 money in the new refinery. To them, it additionally defies centuries of Africa exporting its most valuable resources—including gold, diamonds and humans—rather than placing them to work at home.

Nigeria’s government has collected about $1.Three trillion in oil revenue since 1980, according to the Economist Intelligence Unit. Yet about 60% of the nation’s 170 million people reside on lower than $1 a day, in keeping with the government. It says as a lot as four hundred,000 barrels of oil per day—or one-sixth of total output—are pilfered from pipelines by bandits. Many of the stolen crude is loaded onto barges at evening and shipped abroad.

The refinery deliberate by Mr. Dangote will “change the economic and industrial landscape 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 sessions.

The challenge faces daunting challenges. Competitors can be fierce from U.S. Asian and European firms that also need to satisfy Africa’s thirst for gasoline and other fuel merchandise. Some power firms are increasing 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, conserving prices at the gasoline pump about one-third decrease than they’re within the U.S.

“I do not understand how he’ll do it, but I do know it should be very, very powerful,” mentioned Bismarck Rewane, managing director of Monetary Derivatives Co. a analysis agency in Lagos. He has recognized Mr. Dangote since they lived close to each other within the 1980s and attended center-of-the-night home parties collectively.

Despite all his connections, Mr. Dangote hasn’t won authorities approval for a license wanted to construct the refinery. That isn’t unusual. From 2000 to 2010, more than a hundred refinery construction projects were introduced in Africa. Just one was built, in line with consulting agency Citac Africa Ltd. Others often fell victim to political interference or excessive borrowing prices.

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

In an interview on his yacht, named Mariya after his mom, the billionaire stated his refinery will have no bother competing as a result of it’ll keep away from Nigeria’s expensive and congested ports. He hasn’t stated if it should promote gasoline to retailers for lower than they pay now.

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

Previously decade, Africa’s economic system has grown by an average of 5.6% a yr, compared with the world-extensive progress charge of three.6% per 12 months, based on 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 16 in 2012 and just two a decade ago, in accordance with Forbes journal. These two have been white South Africans.

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

Through the oil boom 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 much of his time and earnings in Brazil, normally having fun with the Carnival festival earlier than Lent. In the nineties, a friend talked him into flying to Atlanta, where he purchased a home and then swung by each other month for jaunts at nightclubs.

He felt snug amid Atlanta’s traditionally black colleges and eating places, far away from a succession of navy coups and botched elections in Nigeria. Startled by a snake in his basement sooner or later, Mr. Dangote sold the home and bought a larger one.

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

That gave him an idea to do one thing huge, he said. He flew back to Nigeria, contributed to the upstart Individuals’s Democratic Party and made a promise after its presidential candidate gained election in 1999. Mr. Dangote vowed to build one of the world’s largest cement plants if the government restricted the circulation of cement via the country’s ports.

The businessman got what he needed. The boundaries on imports of cement—the commonest constructing materials in Africa—lifted prices to twice the world-vast common. His enterprise 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 some of the money at an curiosity fee of 42%. They opened in 2008, and he vaulted onto the billionaires’ list for the first time.

Dangote Group now employs about 25,000 people in Nigeria, is building cement factories in 14 nations in Africa and is shopping for mining licenses from Kenya to Zambia.

A pop music in Nigeria referred to as “Aliko Dangote Special” contains the road “Cover of Forbes, he no be joke.” The motivational ebook “Dangote’s Ten Commandments on Cash” cites the billionaire’s recommendation “to make the best of your time as a result of any time lost cannot be regained.” No. Eight: “Believe in Nigeria.”

“It’s one thing he stated to me years ago: ‘Only Africans will build Africa,’ ” said Kola Karim, chief executive of oil-exploration firm Shoreline Natural Resources Ltd. Mr. Karim sells most of the oil from Shoreline’s fields within the Niger River delta to India but would quite do business with Mr. Dangote.
The 2 men, who are mates, recently talked over the small print on a dock subsequent to the billionaire’s yacht however have not introduced an settlement. “This is where my future lies,” Mr. Karim mentioned. “The market is in Africa.”

Mr. Dangote will soon borrow $1.5 billion to lease about 740,000 acres, an space 50 times greater than Manhattan. He wants to grow sugar and rice for Dangote Group’s processing plants.

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

The industrialist nudged Nigerian bankers for more than a year about his refinery plans. Then he began telling them how a lot they should lend—and at what interest price.

“When he wants one thing, he will get it,” said Edmund Boyo, a partner at legislation firm Clifford Likelihood LLP who worked on the deal.

In September, Dangote Group introduced a $3.Three billion syndicated mortgage from banks led by Standard Chartered of the U.Ok. and Nigeria’s Guaranty Belief Bank PLC. Terms of the $3.3 billion mortgage weren’t disclosed, though he stated it features a penalty if he repays the banks too rapidly.

Nowadays, banks generally cost him less than 6% curiosity, he added, a lower interest rate than Nigeria’s authorities will get on its loans.

Yvonne Ike, chief executive of funding bank Renaissance Capital’s occidental petroleum edmonton international school operations in western Africa, said she has seen bankers’ “eyes watering when they considered how much they had lent” to Mr. Dangote at rock-backside interest rates compared with other firms. Nonetheless, the bankers “couldn’t stand to not be part of the most important debt deal in Africa,” she stated.

Mr. Dangote now’s 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 along occidental petroleum edmonton international school Nigeria’s coast after long battles with kidnappers and pipeline-bombing oil thieves.

The billionaire wants to buy the two companies’ 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 announced any deals to sell the gasoline, plastic and different gas merchandise that might be made by his refinery.

He doubtless will have to lure away customers from state-owned oil firm Nigerian Nationwide Petroleum Corp. It controls the four rundown refineries that dominate Nigeria’s oil trade. Authorities leaders have denounced the corporate as opaque and unscrupulous.

“It’s a waste pipe of corruption,” said 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 youngsters, grandchildren, nephews and nieces to Walt Disney World in Florida final year. That was his first vacation in 17 years, and he has no plans for one more one. The refinery is holding him too busy.

“If there is anything larger than the national honor that the president gave me two years ago, which I do appreciate very much, then he clearly needs to offer me another national honor for building a refinery that we never, ever dreamt about,” he stated.

The billionaire’s non-public jet was landing in Lagos at 1 a.m. last month when his pilot got a call 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 but was stranded 400 miles away by a broken-down plane.

Mr. Dangote advised his pilot to turn around, choose up Mr. Gates and fly again to Lagos. Mr. Dangote obtained house at 4 a.m.