The Obajana cement plant in Kogi State was budgeted at $180 million. It cost $1 billion. Aliko Dangote has explained the gap, and the explanation is not about cement – it is about everything the plant had to build for itself.
He told the 25th annual conference of Women in Management and Business in Lagos that the company deliberately left infrastructure out of its plan because it expected government to provide it.
The escalation
| Item | Figure |
|---|---|
| Initial estimate | $180 million |
| Actual cost | $1 billion |
| Multiple | 5.6 times |
| Overrun | $820 million |
Every dollar of plant ended up carrying $4.56 of things the plant was supposed to be able to rely on.
What he expected, and what he paid for
His own account is specific. The company did not budget for a gas pipeline, fuel facilities or a power plant, because government had announced that adequate power and other utilities would be available.
“We didn’t put in a gas pipeline, we didn’t put fuel in, we didn’t put in a power plant. All these things, because the government announced that we’d be having enough power and other things, which overall ran us into problems.”
So the company built them. A cement plant that intended to buy power became a plant that generates it – which is why Dangote Cement now runs at least 345MW of captive capacity across its Nigerian sites, including 135MW at Obajana itself.
The IFC rejected his repayment plan
Needing more capital, the company went to the International Finance Corporation. He proposed repaying over three years. The IFC ran its own model and refused.
“We wanted to pay within three years, but when the IFC used their own financial model, they said our business plan was wrong. They gave us seven years. They said in the first two years we cannot pay anything. Then, in five years, is the payment period.”
That is a lender looking at a Nigerian industrial project and pricing in more risk than the promoter did. The moratorium is the tell: the IFC did not believe the plant would generate cash in its first two years.
Forty per cent
The number that should stop any reader is this one: he says the company paid interest of up to 40% on local bank loans.
On a ₦10 billion facility, 40% is ₦4 billion of interest a year, against ₦600 million at 6%. That difference does not disappear – it is carried in the price of every bag the plant produces, and ultimately in the price of the house someone builds with it.
Why this is the real explanation for Nigerian building costs
Our reporting this week has been circling the same fact from different angles. Dangote and BUA spent a combined ₦797.1 billion on energy in nine months, because the grid could not carry their load. Between them they generate over 600MW privately.
Obajana is the origin story of that pattern. A plant that expected public utilities ended up financing them, and the $820 million overrun is the invoice for infrastructure the state did not deliver.
This is not a complaint about taxation or regulation. It is the mechanics of building anything large in Nigeria: you provide your own power, your own fuel logistics, sometimes your own roads – and you borrow at rates that would be unthinkable in most markets to do it.
What that means for a buyer
The price of a Nigerian home contains infrastructure that was never built publicly. When you compare Nigerian construction costs to those in countries with working utilities, you are not comparing labour or materials. You are comparing who paid for the grid.
Expect cement and steel prices to carry a power premium. Every producer generating its own electricity has a cost line that a grid-connected competitor elsewhere does not.
Distrust project budgets that assume government utilities. If a developer’s cost plan assumes public power, public water or a road that is “coming”, the overrun is already in the plan. Dangote made exactly that assumption on a $180 million project and it cost him $1 billion.
Ask what the developer has had to build himself. On a large scheme, that question tells you more about the final price than the brochure specification does.
What is not established
These are Dangote’s recollections, given in a conference speech. No audited breakdown of the $820 million overrun has been published, and the figure has not been independently verified.
The speech does not state when the escalation occurred, what proportion went to gas infrastructure versus power versus fuel logistics, or how much of the $1 billion was financed at the 40% rate.
The IFC facility’s terms are described from his account; the loan agreement itself is not quoted.
Frequently asked questions
How much did the Obajana cement plant cost?
$1 billion, against an initial estimate of $180 million – an overrun of $820 million.
Why did it cost so much more?
According to Aliko Dangote, the company expected government to provide power, gas and fuel infrastructure. When it did not, the company built them itself.
What interest rate did Dangote pay locally?
Up to 40% on local bank loans, by his account.
Does this affect what I pay for cement?
Indirectly, yes. Self-generated power, fuel logistics and high-cost local debt are all costs carried into the price of the product.
Last updated: 6 November 2026. The $180 million estimate, $1 billion cost, the missing gas pipeline, fuel facilities and power plant, the IFC seven-year repayment with a two-year moratorium, the 40% local interest rate and all quotations are from BusinessDay’s report of 6 November 2026, covering Aliko Dangote’s remarks at the 25th annual conference of Women in Management and Business in Lagos. The multiple and overrun figures are arithmetic on those stated numbers. The ₦797.1 billion energy spend and captive generation capacities are from Nairametrics, reported 4 November 2026.
