Dangote Group has said it is incorrect that the $1 billion loan backed by the crude from the Nigerian National Petroleum Company Limited (NNPC Ltd) was instrumental in supporting Dangote refinery during liquidity challenges.
The Chief Corporate Communications Officer, NNPC Ltd, Olufemi Soneye, speaking at an Energy Relations Stakeholder Engagement in Abuja, had explained that $1 billion investment in the 650,000 barrels per day Dangote Refinery formed a critical pillar of support for the refinery.
Soneye said: “A strategic decision to secure a $1 billion loan backed by NNPC Ltd’s crude was instrumental in supporting the Dangote Refinery during liquidity challenges, paving the way for the establishment of Nigeria’s first private refinery.
This initiative underscores NNPC Ltd’s dedication to fostering publicprivate partnerships that drive national development.” However, the Group Chief Branding and Communications Officer, Dangote Group, Anthony Chiejina, in a statement yesterday made clarification on the issue.
He said: “We have received numerous inquiries from the media and other concerned stakeholders seeking clarification on a recent report attributed to the NNPC Ltd 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 $1 billion is just about five per cent of the investment that went into building the Dangote Refinery.
“Our decision to enter into a partnership with NNPC Ltd 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 on the sale of a 20 per cent stake at a value of $2.76 billion. Of this, we agreed that they will only pay $1 billion while the balance wilI 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.” He added: “As at 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, NNPC Ltd 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, NNPC Ltd failed to meet this deadline which expired on June 30th 2024.
As a result, their equity share was revised down to 7.24 per cent. These events have been widely reported by both parties.”
