Dangote Clarifies Forex Allocation Controversies
During a tour of the ongoing refinery construction in Lagos by the Vice President of Nigeria, Yemi Osinbajo, the Chairman of Dangote Group and Africa’s richest man, Aliko Dangote, clarified the speculations about forex allocations to Dangote by the Central Bank of Nigeria (CBN) as well as how he receives foreign exchange.
According to media reports, when the Nigerian government restricted the supply of dollars in 2015, Dangote got the larger share of dollars available at the official rate. It was also reported that between March and May this year, Dangote received $161 million from the CBN. However, in response to this allegation, Dangote asserts that the amount was insufficient when compared to the amount of foreign funds his companies use to run their operations.
“Yes, I don’t want to dispute the figures but even if we got $161 million in 11 weeks – 11 weeks is roughly three months; but we need about $98 to $100 million every month for the operations of Dangote Flour Mills, Dangote Sugar, Dangote Cement and diesel to fuel our 9,000 trucks,” Dangote said.
According to him, the funds for the project were sourced externally. The company sourced the $100 million used in acquiring the land from the Lagos state government and raised another $300 million capital to start the project without any assistance. “Legally, we are not supposed to pay the Lagos State Government in dollars. So we brought in $100 million and changed it and paid them the Naira equivalent at that time,” said Dangote.
“Let me expatiate for you to understand so that you don’t get me misquoted. Dangote Industries, which is the holding company, took the loan for this project. This is because the refinery is a brand new company and nobody will give you money for a brand new company,” he told the press. “Dangote Industries used its balance sheet to borrow the money and there is an interest element that will have to be paying because we took the money since 2014. So the interest since 2014 to date is $173 million.”
“That is the only forex we have received from the CBN for this plant out of the $12 billion we are using to build this plant,” he said further. “If you look at the fertiliser complex, the forex is in two components but they are all below $600 million out of $2 billion. So we have always been trying our best,” Dangote added.
The project, which is expected to be ready in the first quarter of 2019, is not near completion. According to the Group Executive Director of Dangote Group, Devakumar Edwin, who spoke to the press, 10 percent of the plant’s construction is in progress while the plant’s basic engineering is currently 98 percent complete.
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