The Dangote Petroleum Refinery and Petrochemicals (DPRP) has debunked claims that the Nigerian National Petroleum Company (NNPC) Limited used a $1 billion loan secured through a crude forward sale agreement to support the refinery during a liquidity crisis.

Dangote Refinery issued the rebuttal in a statement by its Group Chief Branding and Communications Officer, Anthony Chiejina, on Wednesday, December 18, 2024.

This comes on the heels of a recent statement by the Chief Corporate Communications Officer (CCCO) of NNPC Ltd Femi Soneye, who claimed that the national oil company took a loan that paved the way for Nigeria's first private refinery.

Recall that owner of the Dangote Refinery, Aliko Dangote, announced in July that the NNPCL's initial 20% stake in the $20bn refinery had reduced to 7.2% over failure to pay the balance of its share, which was due last June.

Speaking at the energy relations stakeholder engagement in Abuja on Monday, December 16, 2024, Soneye confirmed Dangote's position, explaining that the assessment of NNPCL's investment portfolio led to the decline in its share of the refinery.

He added that the interest, worth $2.76 billion, was financed by a forward sale agreement of $1.036 billion, out of which $1 billion was paid to Dangote Refinery during a liquidity crisis.

Dangote Refinery debunks NNPC's claim

But, responding on Wednesday, Chiejina said NNPCL's account misrepresented the situation, noting that the $1bn is just about 5% of the investment that went into building the Dangote Refinery.

The private refinery explained that it decided to partner with NNPCL because of the recognition of the latter's strategic position in the industry as the largest off-taker of Nigerian crude at the time and the sole supplier of gasoline into the country.

"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 of 2021 when the agreement was signed, the refinery was at the pre-commission stage. In addition, if we were struggling with liquidity issues, 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 stated.

It said the NNPCL remains a valued partner but cautioned all stakeholders to adhere to the facts and present the narrative in the correct context to avoid misleading the public and stakeholders.