$1bn loan: Your statement misleading, Dangote clarifies NNPCL’s stake payment
Dangote Refinery has dismissed recent reports attributed to the Nigerian National Petroleum Company Limited (NNPCL), which suggested that its $1 billion loan, backed by crude, was pivotal in resolving the refinery’s liquidity challenges.
In a statement by its Group Chief Branding and Communications Officer, Anthony Chiejina, Dangote Refinery described the claim as a misrepresentation, noting that $1 billion accounts for just five per cent of the investment in building the refinery.
The company explained that the agreement with NNPCL was based on strategic partnerships, not financial necessity, and clarified that NNPCL’s equity stake was revised to 7.24 per cent after the company failed to meet supply and payment obligations.
Chiejina stressed that their 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.
“We agreed on the sale of a 20 per cent stake at a value of $2.76 billion. Of this, we agreed that they would only pay $1 billion, while the balance will be recovered over a period of five 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,” he said.
He said that NNPCL was later unable to supply the agreed 300,000 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.
He added that the refinery subsequently gave NNPCL a 12-month period 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 30, 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 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 per cent 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 said.