The Dangote Petroleum Refinery has issued a clarification regarding its partnership with the Nigerian National Petroleum Company Limited (NNPCL), emphasizing that the sale of a 20% stake was valued at $2.76 billion. According to the agreement, NNPCL will pay $1 billion upfront, with the remaining amount to be recouped over five years through deductions from crude oil supplies and dividends.
This statement comes in response to comments made by NNPCL’s Head of Corporate Communications, Olufemi Soneye, who indicated that a $1 billion crude-backed loan was secured to support the refinery amid financial difficulties.
Soneye stated, “A strategic decision to secure a $1 billion loan backed by NNPC’s crude was instrumental in supporting the Dangote Refinery during liquidity challenges, paving the way for Nigeria’s first private refinery.”
However, Anthony Chiejina, Group Chief Branding and Communications Officer for Dangote, refuted this claim, describing it as misleading. He pointed out that the $1 billion represents only about 5% of the total investment in the refinery.
Chiejina further clarified that the partnership with NNPCL was based on its significant role as the largest off-taker of Nigerian crude, and he asserted that the refinery had not experienced any financial difficulties as claimed by NNPCL.
“If we were struggling with liquidity challenges, we wouldn’t have offered such generous payment terms,” Chiejina explained. He noted that when the agreement was signed in 2021, the refinery was still in its pre-commissioning phase and that a cash-driven agreement would have been more appropriate if liquidity were an issue.
NNPCL had initially committed to supply 300,000 barrels of crude daily but failed to meet this target due to commitments made to other financiers. Consequently, a 12-month period was granted for NNPCL to pay cash for any remaining equity, which it did not fulfill by the June 30, 2024 deadline, resulting in a reduction of their equity share to 7.24%.
Dangote Refinery reiterated that NNPCL is a valued partner and stressed the importance of accurate reporting to ensure stakeholders have a clear understanding of the situation.
