Dangote Refinery Seeks N2.15tr IPO for Capacity Expansion

The Dangote Petroleum Refinery will seek about N2.15 trillion ($1.6 billion) from a public share sale to double its capacity to 1.4 million barrels per day, with the listing set for September 14 in Lagos.

The plan would give the refinery funds for expansion and place it on course to become the world's largest refinery, ahead of Jamnagar in India.

The company will offer 4.1 billion ordinary shares at N525 each. It said the offer could raise approximately N2.15 trillion ($1.6 billion) if fully subscribed.

The Securities and Exchange Commission has approved the Initial Public Offering, or IPO, allowing the share sale to proceed. An IPO is when a company offers shares to the public for the first time.

The size of the proposed fundraising gives the refinery a new source of money for its plan to double production. The planned 1.4 million barrels per day would be twice the refinery's stated current capacity.

Share sale comes as Dangote builds beyond Nigeria

The public offer is also taking place as Dangote develops another major refinery project in East Africa.

In July, the mega-refinery secured $2.5 billion from private investors to fund its expansion plans as it widens its refining business to East Africa.

The company plans to build a 700,000-barrel-per-day oil refinery in Lamu on Kenya's coast. Groundbreaking for the Kenyan refinery is scheduled for September 30, an official confirmed.

The Kenyan project would give Dangote another large refining facility outside Nigeria. The Lagos refinery's planned capacity of 1.4 million barrels per day would, however, be twice the planned output of the Lamu facility.

Dangote's expansion comes against a backdrop of heavy dependence on imported refined fuel in Africa.

The Africa Finance Corporation, AFC, said in an April report that African countries currently import more than 70 per cent of their refined fuel each year.

The same report said the continent imports about $230 billion worth of essential goods each year. These include food, plastics, steel and fertiliser.

The expansion is tied to reducing Africa's dependence on imported refined products. Dangote said the company was aiming to reduce "Africa's reliance on imported refined products" and strengthen the "continent's energy security".

Nigeria is Africa's leading crude producer, giving the country a large supply base for an oil refining business. The Dangote refinery is based in Lagos and is being developed into a major source of refined petroleum products.

The planned share sale comes at a significant stage in the company's expansion. Investors will be offered a stake in the business as Dangote looks for additional capital for its production plans.

The company said the IPO could become one of the largest capital market transactions in Nigeria's history.