Aliko Dangote, Africa’s richest man, plans to
quadruple the supply of gas to Nigeria by
building pipelines that may be backed by
Carlyle Group LP and Blackstone Group LP,
the world’s two biggest
private-equity firms.
Dangote, who has a net worth of $15 billion,
according to the Bloomberg Billionaires
Index, will invest $2.2 billion to $2.5 billion
in two sub-sea 550-kilometer (341-mile)
pipelines running from the Niger Delta to the
commercial hub of Lagos, Dangote, 58, said
in an interview with Bloomberg.
The pipes will increase the amount
of gas available in Africa’s biggest economy
to four billion standard cubic feet per day
from one billion, he said.
While Nigeria has gas reserves of about
180 trillion cubic feet, more than any other
African country, most of what’s produced is
flared or exported because of a lack of
infrastructure to transport it to local
companies and households. Boosting
domestic supply will help increase
electricity generation in a country where
power cuts are common and about 70 per
cent of electricity plants are fueled by gas,
according to Dangote.
“Having an additional three billion scf will
sort out all the gas issues we have today
in Nigeria,” he said in the lounge of his
house in the Victoria Island district of
Lagos, overlooking a half moon-shaped
swimming pool. “It’s badly needed.”
Dangote, who has interests ranging from
cement to sugar and oil refineries, plans to
start laying the pipelines before the end of
the year, he said. The first one should be
ready by mid-2017.
The International Finance Corp. is
considering an investment in the pipelines
as are Blackstone and Carlyle, Dangote
said. Neither buyout firm responded to e-
mails requesting comment. Desmond
Dodd, a Johannesburg-based spokesman
for the IFC, declined to comment by e-
mail on Monday.
“We have a lot of companies that are very
interested in participating,” Dangote said.
Blackstone and Carlyle said in August they
would partner with Dangote Industries Ltd.,
the holding company for the billionaire’s
operations, to invest in sub-Saharan Africa.
Blackstone said its Johannesburg-based
partner Black Rhino would jointly invest as
much as $5 billion with the company on
energy and other infrastructure in the
region.
The pipelines could be used
by oil producers in Nigeria that currently
have little incentive to sell gas from their
fields in the country, including Royal
Dutch Shell Plc. and Exxon Mobil Corp.,
Dangote said.
“If today they process that gas, there’s no
infrastructure to remove it, there’s no
pipeline,” he said. “We’re trying to build
that infrastructure.”
Nigeria’s economy, which gets 90 per cent
of export earnings and two-thirds of
government revenue from oil, has been hit
by the 40 per cent fall in Brent crude prices
since June. The naira has weakened 18 per
cent against the dollar in that period, while
the Nigerian Stock Exchange All Share
Index is down 20 per cent.
Dangote, who controls Dangote Cement
Plc., Nigeria’s largest listed company, has
seen his wealth fall $3.4 billion this year,
more than anybody else aside from Warren
Buffett, according to the Billionaires Index.
His investments in oil and gas include a
$9 billion refinery near Lagos, which will
be able to process 650,000 barrels a day
when completed. The company got a
license from the government earlier this
year and will export refined fuel to the rest
of sub-Saharan Africa as well as sell it
locally, Dangote said.
“We will be in the market with our
petroleum products by the first quarter of
2018,” he said.
Dangote Cement, which has a market value
of $15 billion and a free float of 7 per cent
in Lagos, will be ready to list its shares in
London by the end of next year, Dangote
said. It is addressing investors’ concerns
in the meantime about the composition of
its board and other corporate governance
issues, he said.
“There are a lot of criteria we’ve met,” he
said. “Our aim is to create a world class
company. That’s why we’re going to
London. It’s not purely because we’re
looking for money.”
Dangote Cement shares were unchanged at
175 naira at 12:12 p.m. in Lagos on
Monday. The stock is down 13 percent this
year, more than the Nigerian stock index,
which has fallen 1.4 percent. Profit
declined 21 percent last year after a bigger
tax bill and higher import costs caused by
the weaker naira, the company said last
month.
Dangote’s companies will increasingly
focus on exports from Nigeria, including of
cement, fertilizer, petrochemicals and
refined fuel.
“But 2018, in the worst case, the Dangote
Group will be able to export about $8
billion to $10 billion worth of goods,” he
said. “We are totally transforming the
business to be export-orientated.”
