NNPC’s $1bn refinery investment plan thwarted by liquidity challenges – Dangote

The Dangote Group has debunked a claim attributed to the Nigerian National Petroleum Company Limited (NNPC) that their decision to secure a $1 billion loan backed by its crude was instrumental in supporting the Dangote refinery during liquidity challenges.

The company said in a statement on Wednesday by its spokesman Anthony Chiejina that the statement misrepresented the facts.

READ ALSO: How FG invested in the establishment of Dangote Refinery – NNPCL

“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 statement said.

“Our decision to enter into a partnership with NNPCL was based on recognition of their strategic position in the industry as the largest offtaker of Nigerian crude and at the time, the sole supplier of gasoline into Nigeria.

“We agreed on the sale of a 20% stake at a value of $2.76 billion. Of this, we agreed that they will only pay $1 billion while the balance will be recovered over a period of 5 years through deductions on crude oil that they supply to us and from dividends due to them. 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-commission stage. In addition, if we were struggling with liquidity issue, this agreement would have been cash-based rather than credit-driven.

“Unfortunately, NNPCL was later unable to supply the agreed 300 thousand barrels a day of crude given that they had committed a greater part of their crude cargoes to financiers with the expectation of higher production which they were unable to achieve.

“We subsequently gave them a 12-month period for them to pay cash for the balance of their equity given their inability to supply the agreed crude oil volume. NNPCL failed to meet this deadline which expired on June 30th 2024. As a result, their equity share was revised down to 7.24%. These events have been widely reported by both parties.

“It is, therefore, inaccurate to claim that NNPCL facilitated a $1 billion investment amid liquidity challenges. Like all business partners, NNPCL invested, $1 billion in the Refinery to acquire an ownership stake of 7.24% stake that is beneficial to its interests.”

Dangote Group further said that NNPC remains its valued partner in progress and added that all stakeholders should adhere to the facts and present the narrative in the correct context to guide the media in reporting accurately.

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