The Dangote Refinery has dismissed claims attributed to the Nigerian National Petroleum Company Limited (NNPCL) that it provided $1 billion to the refinery to address liquidity challenges.
In a statement issued on Wednesday by Anthony Chiejina, Group Chief Branding and Communications Officer, the refinery clarified that the NNPCL’s claim was a misrepresentation of the facts.
Chiejina explained that the $1 billion from NNPCL was an investment made to acquire an ownership stake in the refinery, noting that the amount represents only 5% of the total cost of constructing the Dangote Refinery.
“We have received numerous inquiries from the media and other concerned stakeholders seeking clarification on a recent report attributed to the Nigerian National Petroleum Corporation Limited (NNPCL) 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 $1bn is just about 5% of the investment that went into building the Dangote Refinery,” the statement partly reads.
Continuing, the Dangote refinery noted that its partnership with NNPCL was a recognition of its strategic position in the industry, adding that the agreement with the nation’s oil company was 20% stake, with only $1bn to be paid while others will be recovered through crude oil supply and dividends.
“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 to sell a 20% stake in the refinery for $2.76 billion. As part of the agreement, they were to pay $1 billion upfront, while the remaining balance would be recovered over five years through deductions from crude oil supplies and dividends due to them. If we were facing liquidity challenges, we wouldn’t have offered such favorable payment terms. At the time the agreement was signed in 2021, the refinery was still at the pre-commissioning stage. Furthermore, if liquidity had been an issue, the agreement would have been cash-based rather than credit-driven.
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“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.
“NNPCL 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,” he added.
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