Dangote Industries Limited, the diversified manufacturing conglomerate led by Africa's richest man Aliko Dangote, is contemplating selling a 12.5 percent stake in its refinery, according to Fitch Ratings. This potential divestment is driven by the company's current liquidity challenges.
The move follows growing scrutiny over the high sulphur content in diesel produced by the refinery , despite a $20 billion investment. Reports indicate that the diesel's sulphur levels exceed environmental standards, raising concerns among stakeholders.
Debt repayment and financial restructuring concernsIn 2021, Nigerian National Petroleum Corporation (NNPC) acquired a 7.25 percent stake in the Dangote refinery for $1 billion, with an option to buy an additional 12.75 percent by June 2024. Dangote plans to sell this stake to repay a major loan due in August.
Fitch Ratings has raised concerns about the sale and debt repayment timing, warning of potential financial restructuring or credit downgrades if delays continue. The refinery, running at 50 percent capacity in early 2024, processes 325,000 to 375,000 barrels per day. Gas supply issues are also affecting Dangote's fertilizer operations and refinery EBITDA. Fitch expects gradual EBITDA growth starting in Q3 with higher gasoline production.
