The Dangote Petroleum Refinery on Wednesday clarified its partnership with the Nigerian National Petroleum Company Limited (NNPCL), explaining that it agreed on the sale of a 20% stake at a value of $2.76 billion.
Of the $2.76bn, it agreed that 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 supply to the refinery and from dividends due to them.
The clarification followed a statement credited to the NNPCL that it secured a crude-backed loan of $1 billion to support the refinery project when it encountered some financial difficulties.
NNPCL’s Head of Corporate Communications, Olufemi Soneye, made the disclosure during his remarks at the Energy Relations Stakeholder Engagement in Abuja.
“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.
But speaking in a statement 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.
It explained that its decision to enter into a partnership 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.
It insisted that there was no time the refinery was facing financial difficulty as claimed by the NNPCL.
“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,” the statement added.
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.”
Dangote Refinery stated that NNPCL remains its 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.