The Dangote Group has rejected assertions from the Nigerian National Petroleum Company Limited (NNPCL) alleging that it provided a $1 billion loan, secured with crude oil, to support the refinery project.
Emphasizing that the national oil company did not provide any bailout to the facility, Dangote issued a statement yesterday, signed by Group Chief Branding and Communications Officer, Anthony Chiejina. He clarified that the $1 billion amount represented just about five percent of the total investment in the refinery.
Chiejina highlighted that the collaboration between Dangote and NNPCL was based on the latter’s strategic role as the largest off-taker of Nigerian crude and the exclusive supplier of gasoline in the country at the time.
He explained that while NNPCL acquired a 20 percent stake in the refinery for $2.76 billion, it initially committed to an upfront payment of $1 billion, with the remaining balance to be recouped over five years through deductions from crude supply and dividends.
“If we were facing liquidity challenges, we would not have offered such favorable payment terms,” Chiejina stated, noting that the agreement was signed in 2021 when the refinery was still undergoing pre-commissioning.
Chiejina revealed that NNPCL had failed to fulfill its obligation to supply 300,000 barrels of crude oil daily, which was initially agreed upon. He added that NNPCL had prior commitments to other financiers and faced lower-than-expected production levels. Consequently, the Dangote Group allowed NNPCL a 12-month grace period to settle the remaining balance in cash, with a deadline that expires on June 30, 2024.
He mentioned that due to NNPCL’s inability to meet the deadline, its equity stake was reduced to 7.24 percent. Chiejina stressed that NNPCL’s $1 billion investment was solely for equity purposes and not a financial rescue during a crisis. “Hence, it is incorrect to assert that NNPCL facilitated a $1 billion investment in the face of liquidity challenges,” he stated.
On Monday, NNPCL claimed that securing a $1 billion loan backed by crude oil was crucial in supporting the Dangote Refinery during its liquidity challenges.
The Chief Corporate Communications Officer of NNPCL, Olufemi Soneye, made this announcement during an energy industry stakeholders’ engagement, emphasizing that the loan was instrumental in establishing the Dangote Refinery.
