The Dangote Petroleum Refinery has clarified to the Nigerian National Petroleum Company Limited (NNPCL), claim that they loaned his refinery $1bn rather the company agreed on the sale of a 20% stake at a value of $2.76 billion to NNPC. According to Dangote Group, of the $2.76bn, it agreed, NNPCL will only pay $1 billion while the balance will be recovered over a period of 5 years through deductions on crude oil that they will be supplying to the refinery and from dividends due to the NNPC.
Recall the NNPCL Head of Corporate Communication, Olufemi Soneye has yesterday claimed that the NNPCL secured a crude-backed loan of $1 billion to support the Dangote refinery project when it encountered some financial difficulties.
Soneye made this claim during the Energy Relations Stakeholder Engagement in Abuja.
According to Soneye, “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”.
Reacting to the NNPC claim yesterday, Anthony Chiejina, Group Chief Branding and Communications Officer described the comment as misleading.
“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,” Dangote said.
Dangote Group explained that the company decision to partner with NNPCL was based on recognition of their strategic position in the industry as the largest off-taker of Nigerian crude and at the time, the sole supplier of gasoline into Nigeria.
He insisted that contrary to the claim, there was no time the refinery was facing financial distress as revealed by the NNPCL.
The statement partly said, “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”.
NNPCL said, “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.”
Meanwhile, Dangote Refinery reiterated that NNPCL remains its valued partner in progress and it is essential for all stakeholders while making a statement to strictly adhere to the facts and present the narrative in the correct context, saying this will guide the media in reporting accurately for the benefit of our stakeholders and the general public.
