Dangote Group President Aliko Dangote said at the weekend that his company lost N50 billion to the flexible foreign exchange policy.
The Central Bank of Nigeria (CBN) last week scrapped the dual exchange rate policy, creating a single window for the trade in naira.
Dangote spoke when Vice President Yemi Osinbajo toured the project sites of Dangote Fertiliser and Dangote Refinery in Lekki, Lagos.
Dangote said the $161 million his companies bought during that period from the CBN merely reflected the size of his business and did not represent preferential treatment.
“We have been badly affected like any other company,” he said, arguing that operational costs totalled $100 million each month due to recurring expenses, such as the purchase of parts for cement production and running a fleet of 9,000 trucks.
“When you are talking about 20 billion dollars worth of projects, what is 161 million? One-hundred-and-sixty-one million dollars is what I need in just six weeks,” he said.
“This week (last week), the Central Bank removed the peg that has held the naira at the official rate of 197 for the last 16 months, leading to a 30 per cent devaluation as the currency traded freely on the interbank market.”
Dangote said the decline had pushed up costs. “This devaluation alone, we have lost over 50 billion naira ($176 million),” he said.
“The gas, which is our main source of power, is priced in dollars. If there is 40 per cent devaluation, your price will go up by 40 per cent. Every single aspect of the production will go up by that percentage,” he said.
To Osinbajo, the Dangote Fertiliser and Petrochemical projects are capable of assisting in the government’s drive to reduce poverty through generation of foreign exchange.
He said it was also in line with the Federal Government’s immediate objective of diversifying the economic base of the country as a result of the plummeting of the price of oil, the country’s sole foreign exchange earner.
Osinbajo was accompanied during the working visit to the Dangote Refinery, Petrochemicals and fertilisers, reputed to be the biggest in Africa when completed, by Lagos State Governor Akinwunmi Ambode, Ministers of Finance (Mrs Kemi Adeosun); Power, Works and Housing (Babatunde Fashola); Solid Minerals Development (Kayode Fayemi) and others. He was amazed at the size of the projects and reiterated the government’s preparedness to provide an enabling environment for businesses to thrive.
Dangote said the diversification of Nigeria’s economy was long overdue and that one sector that the government can focuses on is agriculture.
He said his investment in fertilizer production was a sure way the diversification into agriculture could succeed because according to him, it will amount to little if focus is directed to agriculture and fertilisers would be imported.
“By the time we complete this project, there will be opportunity to take on agriculture and say bye to poverty, because there will be jobs, no sector has more job potential than agriculture,” Dangote added.
Dangote told the Vice-President that the $12 billion refinery would have a capacity of 650,000 barrels a day. According to him, there will be market for the refined products because only three African countries – South Africa, Egypt and Cote D Ivoire – have functioning refineries.
On the project, he said: “Mechanical completion will be end of 2018 but we will start producing in 2019.”
The refinery, petrochemicals and fertiliser in one spot according to Dangote, is the single largest stream in the world. “This site is the biggest site in the world, the refinery is the biggest single refinery in the world, the petrochemicals is 13 times bigger than Eleme petrochemicals while the fertiliser plant will be 10 times bigger than former National Fertiliser company. The project, with the $2 billion fertiliser unit was the funded through loans, export credit agencies and our own equity, Dangote said.