What Nigerians Stand To Gain If Dangote Refinery Is Listed On The Stock Market
As Aliko Dangote ramps up plans for his $20 billion oil refinery to begin churning out diesel, kerosene, and jet fuel as early as December 2023, Africa’s richest man is seeking to list his newest venture on the country’s stock market.
Nigeria’s business mogul, with investments in salt, flour, sugar, and cement, many of which are already listed on the Nigerian Stock Exchange, ventured into the oil and gas sector with a multi-billion-dollar project to end the country’s 50 years of being dependent on imported refined petroleum products.
However, 10 years after plans for the refinery began, Dangote, whose wealth is estimated at $16.2 billion by the Bloomberg Billionaires Index, said that his facility, the biggest single train refinery in the world built in the nation’s economic hub, Lagos, is set to refine crude.
“We’re starting with 350,000 barrels a day,” he told the Financial Times in a recent interview.
Indicating that all crude oil supply issues with the government-run oil company, NNPC, have been resolved, Dangote noted that the company will be floated as a separate entity, first at the Nigerian Stock Exchange.
“We have resolved all the issues of supply, and I don’t think NNPC needs to buy more shares. I think they’re okay with what we’ve given them,” he said.
While in early November, the 66-year-old businessman discussed that he had secured a license to refine over 300,000 barrels of crude oil per day, NNPC had earlier purchased 20 percent of the refinery at $2.7 billion in 2021. However, the present plan to have it listed in the stock market has elicited reactions from financial experts.
Experts believe that having the 650,000 barrel-a-day facility, which is expected to produce 27 million liters of diesel, 11 million liters of kerosene, and 9 million liters of jet fuel, at full capacity, will offer Nigerians the opportunity to directly invest and benefit from one of Africa’s most significant industrial ventures.
The Nigerian stock market, which was recorded as the best-performing stock market globally in 2020, is expected to receive renewed interest from local and international investors if Dangote Refinery is listed.
Damilare Akanni, a financial expert, said if listed, it will increase the size of the Nigerian economy by attracting foreign investors.
“Listing Dangote’s refinery on the Nigerian Stock Market will attract investors, which will increase the financial flow into the economy and contribute to economic growth,” he said.
In Nigeria, publicly traded companies are mandated by law to declare their financial status like quarterly earnings, debt, and revenue growth. It is believed that having these financial details publicly declared adds some level of transparency.
Unlike NNPC, which is yet to be listed on the stock exchange and was unprofitable for 44 years until 2020 when it declared a profit of N287 billion, Akanni said that if Dangote’s refinery is listed, “the financial dealings of the company will be transparent to the public, especially to shareholders.”
For Nigerians who would love to trade the refinery, the performance of Dangote’s other stocks like DANGCEM, which grew by 25 percent year on year, and the DANGSUGAR, which made an impressive return of 269 percent for investors year-on-year, might offer a hint into how profitable the company will be.
“The listing will serve as a source of investment to Nigerians. It will create more wealth when listed, some of which goes directly into the pockets of Nigerian investors, improving their well-being,” he said.
Although Akanni said it would be more beneficial to Nigeria if the refinery could achieve cross-border listing, Dangote failed to reveal particularly when his new company will be listed.
