Lagos, Dec. 19, 2024 – Dangote Refinery has denied that the $1 billion loan the Nigerian National Petroleum Company Limited (NNPCL) gave the company was not to support the refinery, but rather represented about 5 per cent of its investment in the refinery.
Anthony Chiejina, Dangote’s Chief Spokesman, made the disclaimer in a statement in Lagos on Wednesday.
Dangote Refinery said the $1 billion NNPC claimed to have given to support the refinery was given in the bid to acquire a 7.24 per cent stake in the refinery.
The statement reads: “We have received numerous inquiries from the media and other concerned stakeholders seeking clarification on a recent report attributed to the Nigerian National Petroleum Company Limited (NNPC Ltd) that their decision to secure a $1 billion loan backed by its crude was instrumental in supporting the Dangote refinery during liquidity challenges.
“We would like to clarify that this is a misrepresentation of the situation as $ 1 billion is just about 5 per cent of the investment that went into building the Dangote Refinery,” the statement said.
The Dangote Refinery said its decision to enter into a partnership with NNPC Ltd was based on recognition of its strategic position in the industry as the largest offtaker of Nigerian crude and at the time, the sole supplier of petrol into Nigeria.
“We agreed on the sale of a 20 per cent 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 a liquidity issue, this agreement would have been cash-based rather than credit-driven.
“he NNPC Ltd was later unable to supply the agreed 300 thousand barrels a day of crude given that it had committed a greater part of its crude cargoes to financiers with the expectation of higher production which it was 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. NNPC Ltd failed to meet this deadline which expired on June 30th 2024.
“As a result, their equity share was revised down to 7.24 per cent . These events have been widely reported by both parties. It is, therefore, inaccurate to claim that NNPC Ltd facilitated a $1 billion investment amid liquidity challenges
“NNPC Ltd remains our valued partner in progress, and it is imperative for all stakeholders to adhere to the facts and present the narrative in the correct context to guide the media in reporting accurately for the benefit of our stakeholders and the public.”
