The Dangote Petroleum Refinery and Petrochemicals has assured prospective investors that its ongoing Initial Public Offering (IPO) will deliver huge dividends in US dollars without exposing them to construction risks. This comes as the company shifts from building to harvesting value from its US$20 billion asset.
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Vice President, Oil and Gas, Dangote Industries Limited, Mr. Devakumar Edwin gave the assurance on Friday during a press engagement at the Dangote Refinery Complex in Ibeju-Lekki, Lagos where he addressed concerns about pricing, profitability and expansion.
Edwin said the refinery’s philosophy on listing was to de-risk investors by only going public after a project is completed and profitable. This he argues is opposite to what is obtainable in most parts of the world, where projects raise equity at the project stage.
He explained that the Dangote group complete the project, brings it to operations, starts declaring profit, and then goes public.
“What we are achieving is, none of the shareholders is taking any risk. Because we are selling a company which is already running profitably,” he said.
He added that the first six months operational results had been declared to give investors a clear view or profitability, and that staff who understand the business had already taken up private placements.
On returns, the company promised sustainable dividends in foreign exchange. Edwin said the President and Group Chief Executive of Dangote Petroleum Refinery, Alhaji Aliko Dangote, had declared that dividends will be paid in dollars, backed by massive FX earnings from exports.
Currently, about 50 percent of the refinery’s production is exported, he stated, adding that with the new 700,000 barrels per day expansion train, all products from that plant will be exclusively for export.
“Now, the new refinery will let all 100 percent go for export because I am already exporting half of my production… So, foreign exchange generation is going to be huge. So, that is why he (Aliko) was able to give assurance that he will be paying dividends in dollar,” he said.
On sustainability of payouts, Edwin asked investors to judge by the group’s track record in cement, sugar and salt. He said the group distributes almost all profits not reinvested in expansion as dividends, and that new investments ultimately raise share value.
Nnamdi Maduakor is a Writer, Investor and Entrepreneur
