It would be completed by 2016 and would see Nigeria's current refining capacity double.
"This will really help not only Nigeria but sub-Saharan Africa. There has not been a new refinery for a long time in sub-Saharan Africa," Mr Dangote told Reuters news agency, adding that "It has to be done".
Oil-rich Nigeria is Africa's biggest oil producer but lacks refining capacity and has to import most of its fuel.
Nigeria has two refineries in the Port Harcourt area, but neither runs at full capacity.
Mr Dangote, 56, said a new refinery was vital for the country and argued that those who should have invested in refineries were benefiting from Nigeria's lack of capacity.
"The people who were supposed to invest in refineries, who understand the market, are benefiting from there being no refineries because of the fuel import business," he said. "Some ... are going to try to ... interfere.
"In five years, when our population is over 200 million, we won't have the infrastructure to receive the amount of fuel we use. It has to be done."
His plan may face opposition.
"The people who were supposed to invest in refineries, who understand the market, are benefiting from there being no refineries because of the fuel import business," Dangote said.
Dangote is Africa's richest man and he made his fortune in cement, flour and sugar. He is worth an estimated $16 billion according to Forbes Magazine.
Image: © Getty
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