The Dangote Group has dismissed claims by the Nigerian National Petroleum Company Limited (NNPCL) that it provided a $1 billion loan, backed by crude oil, to support the facility .
Insisting that the national oil company did not in any way provide a bailout to the refinery, Dangote noted in a statement, yesterday, signed by the Group Chief Branding and Communications Officer, Anthony Chiejina, clarified that the $1 billion represented only about five per cent of the total investment in the refinery.
Chiejina said the partnership between Dangote and NNPCL was based on the latter’s strategic position as the largest off-taker of Nigerian crude and the sole supplier of gasoline in the country at the time.
He said while NNPCL acquired a 20 per cent stake in the refinery valued at $2.76 billion, it initially agreed to pay $1 billion upfront, with the balance to be recovered over five years through crude supply deductions and dividends.
“If we were struggling with liquidity challenges, we would not have given them such generous payment terms,” Chiejina stated, adding that the agreement was signed in 2021 when the refinery was still at the pre-commissioning stage.
NNPCL was unable to meet its commitment to supply 300,000 barrels of crude oil per day as agreed, Chiejina said, adding that NNPC had prior obligations to other financiers and lower-than-expected production. He added that as a result, the Dangote Group granted NNPCL a 12-month grace period to pay the remaining balance in cash, a deadline that expired on June 30, 2024.
He said because of NNPCL’s inability to meet the deadline, its equity share was revised to 7.24 per cent. Chiejina emphasised that NNPCL’s $1 billion investment was purely for equity acquisition and not a bailout during financial difficulties. “It is, therefore, inaccurate to claim that NNPCL facilitated a $1 billion investment amid liquidity challenges,” he said.
On Monday, NNPCL said a decision to secure a $1 billion loan backed by its crude was instrumental in supporting the Dangote Refinery during liquidity challenges.
The Chief Corporate Communications Officer of NNPCL, Olufemi Soneye, disclosed this at an energy relations stakeholders’ engagement, where he stressed that the loan paved the way for Dangote Refinery.
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