Dangote Group has issued a clarification regarding a report that the Nigerian National Petroleum Company Limited (NNPCL) played a crucial role in supporting Dangote Refinery during liquidity challenges through a $1 billion loan backed by crude oil.
On Monday, the NNPCL Chief Corporate Communications Officer, Mr Olufemi Soneye, at a stakeholders’ engagement meeting, said the company secured a $1 billion loan backed by crude oil to support the development of the 650,000 barrels per day refinery.
But in a statement signed by Anthony Chiejina, the Group Chief Branding and Communications Officer, on Wednesday, Dangote Group rejected these claims, explaining that the $1 billion is just a small fraction of the total investment in the refinery.
“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 said.
The company explained that the partnership with NNPCL was formed based on their strategic position in the industry.
“Our 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 added.
Under the agreement, NNPCL acquired a 20% stake in the refinery for $2.76 billion, with the terms allowing them to pay $1 billion upfront and the balance to be paid over five years through deductions from crude oil supplied to the refinery and dividends.
“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.”
The statement further emphasised that such terms would not have been offered if the refinery had been experiencing liquidity issues.
“If we were struggling with liquidity challenges, we wouldn’t have given them such generous payment terms,” the statement said.
He said NNPCL later failed to meet its commitment to supply 300,000 barrels per day of crude oil, as it had committed a significant portion of their crude cargoes to financiers.
“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,” he said.
In response to the shortfall, he said Dangote offered NNPCL a 12-month period to pay the balance of their equity in cash. However, NNPCL failed to meet the deadline, which expired on 30th June 2024.
“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,” he said.
As a result, NNPCL’s equity share was reduced to 7.24%. Dangote reiterated that the $1 billion investment was made by NNPCL to acquire a 7.24% stake in the refinery.
“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,” he said.
The statement concluded by reaffirming NNPCL’s importance as a partner.
“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.
