Dangote Refutes Claims of $1bn Bailout from NNPCL
By Patience Ikpeme
Dangote Group has issued a statement clarifying its partnership with the Nigerian National Petroleum Company Limited (NNPCL) regarding the Dangote Refinery, refuting recent reports suggesting that a $1 billion loan from NNPCL, secured against crude oil, was instrumental in rescuing the refinery from liquidity challenges.
According to a statement signed by Anthony Chiejina, Group Chief Branding and Communications Officer of Dangote Group, the $1 billion represents only about 5% of the total investment in the Dangote Refinery. The partnership with NNPCL was strategically formed based on NNPCL’s position as the largest offtaker of Nigerian crude and, at the time, the sole supplier of gasoline in Nigeria.
Chiejina explained that the initial agreement involved the sale of a 20% stake to NNPCL at a value of $2.76 billion. The agreed payment terms stipulated that NNPCL would pay $1 billion upfront, with the remaining balance to be recovered over five years through deductions from crude oil supplied to the refinery and from dividends due to NNPCL.
“If we were struggling with liquidity challenges, we wouldn’t have given them such generous payment terms,” Chiejina asserted. He pointed out that the agreement was signed in 2021 when the refinery was still in the pre-commissioning stage. He further emphasized that if liquidity was an issue, the agreement would have been cash-based rather than credit-driven.
The statement revealed that NNPCL subsequently faced challenges in supplying the agreed 300,000 barrels per day of crude oil, as they had committed a significant portion of their crude cargoes to financiers in anticipation of increased production, which they were unable to achieve.
Chiejina disclosed that Dangote Refinery then granted NNPCL a 12-month period, expiring on June 30, 2024, to pay the outstanding balance of their equity in cash due to their inability to meet the agreed crude oil supply volume. NNPCL failed to meet this deadline, resulting in a downward revision of their equity share to 7.24%. These developments have been publicly reported by both parties.
Therefore, Dangote Group maintains that it is inaccurate to portray NNPCL’s $1 billion as a bailout during liquidity challenges. Instead, the $1 billion represented NNPCL’s investment to acquire a 7.24% ownership stake in the refinery, a stake that serves its own interests.
Chiejina concluded by affirming that NNPCL remains a valued partner in progress and stressed the importance of all stakeholders adhering to the facts and presenting the narrative in the correct context to ensure accurate media reporting for the benefit of stakeholders and the public. The clarification aims to correct any misinterpretations and provide a clear understanding of the nature of the partnership between Dangote Group and NNPCL.
