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Dangote Petroleum Refinery has rejected claims made by NNPC Ltd regarding a $1 billion refinery investment, calling the statement inaccurate and misleading.
Dangote Petroleum Refinery pointed out that the facts were distorted, resulting in a misleading impression of the investment’s scope and significance to stakeholders and the public.
The company clarified that the $1bn crude-backed loan is only five per cent of the total investment that went into building the 650,000 barrels per day refinery.
On Monday, at a stakeholders’ engagement meeting, Mr. Olufemi Soneye, Chief Corporate Communications Officer of NNPCL, revealed that the national oil company had secured a $1 billion loan, backed by crude oil, to fund the development of its 650,000 barrels per day refinery. Soneye stressed that this initiative reflects NNPCL’s dedication to promoting public-private partnerships, which are crucial for fostering economic growth and advancing the country’s energy sector. He also noted that the move aligns with the company’s broader efforts to drive infrastructure development and contribute to Nigeria’s long-term economic prosperity.
But responding in a statement after receiving numerous inquiries from concerned stakeholders, the Group Chief Branding and Communications Officer, Anthony Chiejina, on Wednesday, described NNPCL’s claim as “misinformation.”
According to him, it is inaccurate to say NNPCL facilitated $1bn for Dangote Refinery amid liquidity challenges.
The statement titled, “Addressing NNPCL’s Misinformation”, read, “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 further clarified that in 2021, NNPCL had proposed a 20 percent stake investment, valued at $2.76 billion, in the Dangote Refinery. However, the deal did not materialize due to NNPCL’s inability to supply the agreed 300,000 barrels of crude per day. He also highlighted that NNPCL was ultimately able to secure a $1 billion investment, representing a 7.24 percent equity stake in the refinery.
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.”
It added that 12 months of grace was provided for the national oil firm to fulfil its obligations, which were still not met, hence a downgrade of its equity share to 7.5 per cent.
He explained, “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.”
