Shareholders in the Dangote Petroleum Refinery will receive their dividends in foreign currency, the Vice President of Dangote Industries Limited, Devakumar Edwin, has said, relaying a declaration by the company's President, Aliko Dangote.
Edwin spoke on Friday at a media tour and briefing at the refinery, as the company seeks subscribers for its initial public offering (IPO). "My president has even declared that the dividends will be in foreign exchange, in dollars," he said.
He said export earnings would fund the payments. About half of the refinery's current output is exported, and almost all products from the planned expansion will go to export markets, which he said would generate the foreign exchange needed.
Edwin said the company expects the share price, currently N525, to appreciate after listing and rejected fears that it could fall. He said Dangote Industries chose to offer shares after the refinery had been built, commissioned and operated, so investors are buying into an operating company. He added that the refinery had released its first six months of operational results, and urged individuals to make their own evaluation before investing.
On concerns that crude prices could fall after the US-Iran war, Edwin said the refinery's profit depends on refining margins, not the price of crude, because product prices move with crude. He said the war could temporarily lift profitability through disruptions to product supply from Middle East refineries, but that this extra margin would decline. He said returns on the $20bn investment remained on target.
Edwin said the group's target is at least 10 million shareholders, with the minimum subscription set at N5,250 to allow participation across income levels. Refinery employees were offered shares in the private placement, and he said he was among those who bought.
On the expansion, he said completion is targeted within three years, all licences have been obtained and most equipment has been ordered. The project should cost slightly less than the first refinery because the quarry, welding gases plant and port already exist. On fuel blending, he said importing products solely for that purpose would not make economic sense when the refinery can produce them directly from crude.