Your information on $1bn investment misleading, Dangote Refinery replies NNPCL

The Dangote Petroleum Refinery has addressed what it calls inaccurate and misleading information from the Nigerian National Petroleum Company Limited (NNPCL) regarding the details of a $1bn investment in its operations.

The refinery clarified that the claim misrepresented the facts, potentially misleading stakeholders and the public about the scope and nature of the investment.

In a statement issued on Wednesday by the Group Chief Branding and Communications Officer, Anthony Chiejina, the refinery explained that the $1bn crude-backed loan facilitated by NNPCL represents only five percent of the total investment used to build the 650,000 barrels-per-day refinery.

Earlier, at a stakeholders’ engagement meeting on Monday, NNPCL’s Chief Corporate Communications Officer, Olufemi Soneye, disclosed that the national oil company had secured the $1bn loan, emphasizing that it underscored NNPCL’s commitment to fostering public-private partnerships for economic growth.

However, Dangote Refinery dismissed this narrative, labeling it as “misinformation.” The company stressed that while the crude-backed loan supported the refinery’s operations, it is inaccurate to portray NNPCL as a key facilitator of the refinery’s financing, particularly 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.”

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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.

He also noted that NNPCL was able to invest $1bn, which amounts to a 7.24 per cent equity value.

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.”

Your information on $1bn investment misleading, Dangote Refinery replies NNPCL