Fitch Ratings highlighted the group's urgent need to service a significant syndicated loan maturing in August 2024. The group plans to use funds from the equity sale to meet this obligation. However, Fitch expressed concerns about the timely completion of this sale. Delays could force the group into financial restructuring or even default, which might lead to a downgrade in Dangote Group's credit rating.
The refinery, which began operations earlier this year, operated at about 50-percent capacity. It produced 325,000 to 375,000 barrels per day (bpd) in the first half of the year. This output is lower than expected as the facility is still ramping up production. Additionally, Dangote's fertilizer business has struggled with inadequate gas supply, which further strains the company's finances.
Fitch Ratings expects gradual improvement in the refinery's earnings as it begins gasoline production in Q3 2024. Despite this, the group's debt obligations remain a concern. At the end of 2023, Dangote Group had senior secured debt at the subsidiary level totaling $2.7 billion. This represents 49 percent of the group's total debt. The debt structure also includes shareholder loans from Greenview plc, the group's parent company, totaling $2.3 billion, or 43 percent of total debt.
Aliko Dangote recently announced that the group has paid off $2.4 billion of the $5.5-billion loan for the refinery, leaving $2.7 billion outstanding. The project faced delays due to land acquisition issues and extended timelines for sand-filling, which delayed the project for nearly five years.
