Dangote refinery refutes NNPCL’s $1bn liquidity support claim

The Dangote Group has addressed recent claims attributed to the Nigerian National Petroleum Company Limited (NNPCL) regarding a $1 billion loan-backed investment, clarifying that the assertion is a misrepresentation of events.

In a statement issued by the Group Chief Branding and Communications Officer, Anthony Chiejina, the Dangote Group emphasized that the $1 billion referenced represents only about 5 per cent of the total investment in the Dangote Refinery, and the partnership with NNPCL was not predicated on liquidity challenges.

According to Chiejina, the arrangement with NNPCL involved the sale of a 20 per cent equity stake in the refinery for $2.76 billion. Under this agreement, NNPCL committed to an initial payment of $1 billion, with the balance to be recovered over five years through deductions from crude oil supplied to the refinery and dividends due to NNPCL.

“ If we were struggling with liquidity challenges we wouldn’t have given them such generous payment terms. As at 2021 when the agreement was signed, the refinery was at the pre-commission stage. In addition, if we were struggling with liquidity issue, this agreement would have been cash based rather than credit driven.,” Chiejina noted.

He further explained that while NNPCL was initially expected to supply 300,000 barrels of crude oil per day, it struggled to meet this commitment due to pre-existing obligations to other financiers. Consequently, the refinery revised NNPCL’s payment terms, granting a 12-month window for cash settlement of the remaining equity. However, this deadline expired on June 30, 2024, without fulfillment, leading to a downward revision of NNPCL’s stake to 7.24 per cent.

“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 stake that is beneficial to its interests.,” the statement clarified.

Despite these developments, Dangote reiterated its commitment to NNPCL as a key business partner, urging stakeholders and the media to report accurately and maintain context in their narratives.

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