Claims by the Nigerian National Petroleum Company Limited it invested $1bn investment in the Dangote Refinery’s operations, has been described as misinformation by the management of Nigeria’s first privately owned refinery.
While speaking at stakeholder’s forum on Monday, NNPCL Chief Corporate Communications Officer, Mr. Olufemi Soneye, said the Dangote Refinery was propped up by a $1bn investment loan backed by crude oil.
But Dangote Refinery Group Chief Branding and Communications Officer, Anthony Chiejina, said Wednesday in statement that the NNPCL’s claim was inaccurate.
“We have received numerous inquiries from the media and other concerned stakeholders seeking clarification on a recent report attributed to the Nigerian National Petroleum Company Limited that their decision to secure a $1bn 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 $1bn is just about 5 per cent of the investment that went into building the Dangote Refinery.”
Chijiena also explained that NNPCL had proposed a 20 per cent stake investment valued at $2.76bn in the Dangote Refinery in 2021, but that didn’t materialise due to the inability of the NNPCL to supply the agreed 300,000 barrels a day of crude.
The statement continued, “Our decision to enter into a partnership with NNPCL was based on recognition of their strategic position in the industry as the largest offtake 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 $2.76bn. Of this, we agreed that they will only pay $1bn 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.
“Unfortunately, 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 said that the NNPCL failed to fulfil its obligations in the 12 months period of grace hence a downgrade of its equity share to 7.5 per cent.
“We subsequently gave them 12 months 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. 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 $1bn investment amid liquidity challenges. Like all business partners, NNPCL invested, $1bn in the Refinery to acquire an ownership stake of 7.24 per cent stake which 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.”
