Why we reduced NNPC Ltd’s equity in our refinery — Dangote clarifies

…Says Dangote not battling liquidity challenges

By Esther Adebayo

The Dangote Group has provided clarity on the controversy surrounding the reduction of the Nigerian National Petroleum Company Limited (NNPC) equity in the Dangote refinery.

It was previously reported that NNPC Ltd had secured a $1 billion loan to support the Dangote refinery, citing liquidity challenges. However, Dangote Refinery has now clarified that this narrative is inaccurate.

According to Group Chief Branding and Communications Officer of Dangote Industries Limited, Anthony Chiejina, the actual agreement between NNPCL and Dangote Refinery involved a 20% stake purchase valued at $2.76 billion, with $1 billion paid upfront. The remaining balance of $1.76 billion was to be recovered over five years through deductions from crude oil supplies and dividends.

This clarification contradicts NNPCL’s earlier claim that the $1 billion loan was intended to facilitate a significant investment in the refinery due to liquidity issues. Instead, the agreement was based on NNPCL’s strategic position in the industry as the largest off-taker of Nigerian crude and the sole supplier of gasoline in Nigeria.

Chiejina emphasised that if Dangote Refinery were facing liquidity challenges, it would not have offered NNPCL such generous payment terms. He also pointed out that, at the time the agreement was signed in 2021, the refinery was still in its pre-commissioning phase.

He further explained, “Unfortunately, NNPCL’s inability to supply the agreed 300,000 barrels of crude per day led to a revision of their equity share from 20% to 7.24%.”

“Dangote Refinery had granted NNPCL a 12-month period to pay the balance of their equity in cash, but NNPCL failed to meet this deadline, which expired on June 30, 2024.”

“These developments have been widely reported by both parties, underscoring the importance of accuracy in reporting.”

Chiejina urged all stakeholders to adhere to the facts and ensure that the narrative is presented in its correct context to facilitate accurate reporting.

“NNPCL remains a valued partner in progress, and Dangote Refinery looks forward to continuing its collaboration,” he said.

“However, it is essential to set the record straight and provide accurate information to avoid misleading the public.”