Modular refinery build
$ 350 million USD
Structuring; Capital Markets; Strategic Planning; Advisory
The Dangote Group’s $ 14 billion refinery construction project, with a projected 650,000 barrels per day of refined petroleum products, has justifiably stolen much of the limelight in Nigeria’s drive to update and expand its refining capacity. Yet smaller projects by Dangote subsidiaries are seeking to make small but significant contributions to the development of greater domestic fuel autarky. To this end, Borkir International seeks to build a relatively modest, domestic market-focused 30,000 barrels per day modular condensate refinery in Imo State.
However, access to and cost of finance are the greatest constraints faced by this project: local financial institutions charge high premiums on project financing as Nigerian financial markets lack the depth to drive economic diversification and job creation, or finance infrastructure investment; conversely, the constraints on hard currency availability in Nigeria and the difficulty of hedging local currency has led international financial institutions to avoid project financing in Nigeria altogether.
By levering the good faith and credit of the Dangote Group or its subsidiary companies' balance sheet, we are able to attract interest from external credit agency-backed financing. This structure has the dual benefits of a smaller equity requirement of 15% and a longer tenor of up to 10 years from the project completion, which makes the debt service costs much more manageable and, on the whole, smaller than a conventional project financing approach - were that possible.Simultaneously, we are able to identify and co-ordinate suitable project delivery companies for the EPC and Operating and Maintenance components of the project. By conflating the financial structuring and EPC elements of the project, we are able to streamline the process, cutting delivery time and often reducing the overall cost of the project at hand.