The Dangote Petroleum Refinery has addressed reports about its partnership with the Nigerian National Petroleum Company Limited (NNPCL), clarifying the terms of a 20% equity stake sale valued at $2.76 billion
. According to the refinery, NNPCL agreed to pay $1 billion upfront, with the remaining balance to be recovered over five years through deductions from crude oil supplied to the refinery and dividends due to NNPCL.
This clarification follows a statement by NNPCL’s Head of Corporate Communications, Olufemi Soneye, at an Energy Relations Stakeholder Engagement in Abuja, where he claimed that a $1 billion crude-backed loan supported the refinery during financial difficulties.
“A strategic decision to secure a $1bn loan backed by NNPC’s crude was instrumental in supporting the Dangote Refinery during liquidity challenges, paving the way for the establishment of Nigeria’s first private refinery,” Soneye said.
However, Anthony Chiejina, Group Chief Branding and Communications Officer of Dangote Group, described the statement as misleading, stating that the refinery never experienced liquidity challenges.
“We would like to clarify that this is a misrepresentation of the situation as $1bn is just about 5% of the investment that went into building the Dangote Refinery,” the company said in a statement.
The refinery emphasized that its partnership with NNPCL was based on the latter’s strategic position as Nigeria’s largest crude oil off-taker and sole gasoline supplier at the time. It further noted that the agreed payment terms reflected the refinery’s financial stability.
“If we were struggling with liquidity challenges, we wouldn’t have given them such generous payment terms. As at 2021, when the agreement was signed, the refinery was at the pre-commissioning stage. If there were liquidity issues, this agreement would have been cash-based rather than credit-driven,” the statement added.
According to the refinery, NNPCL initially committed to supplying 300,000 barrels of crude oil daily but was unable to fulfill this due to existing commitments to other financiers. A 12-month deadline for NNPCL to pay the balance of their equity expired on June 30, 2024, leading to a reduction in their equity stake to 7.24%.
“NNPCL invested $1 billion to acquire a 7.24% stake in the refinery, a transaction beneficial to its interests. It is, therefore, inaccurate to claim that NNPCL facilitated a $1 billion investment amid liquidity challenges,” Dangote Refinery stated.
The refinery reaffirmed its partnership with NNPCL, urging stakeholders to adhere to facts to ensure accurate media reporting for the benefit of the public and investors.
