Dangote Refinery, owned by the Dangote Group, has rejected claims by the Nigerian National Petroleum Company Limited (NNPCL) that it received a $1 billion loan from the state-owned oil firm. The refinery’s spokesperson, Anthony Chijiena, referred to the claim as misinformation.
The issue arose when NNPCL’s spokesperson, Olufemi Soneye, stated that NNPCL secured a crude-backed $1 billion loan to support the Dangote Refinery during financial difficulties. In response, Chijiena clarified that the $1 billion loan accounts for only about five percent of the total cost of constructing the refinery, which has a capacity of 650,000 barrels per day.
Additionally, Chijiena noted that NNPCL had initially proposed acquiring a 20 percent equity stake in the refinery, valued at $2.76 billion. However, this proposal did not materialize. Instead, NNPCL invested $1 billion, representing a 7.24 percent ownership in the refinery.
This clarification comes after earlier disputes between Dangote Refinery and NNPCL, including a disagreement over petrol pricing in September 2024.
The Dangote Group emphasized that the refinery’s funding was independently managed and that the $1 billion investment from NNPCL was part of an equity deal, not a loan to address liquidity challenges.
“Our decision to enter into a partnership with NNPCL was based on recognition of their strategic position in the industry as the largest offtaker of Nigerian crude and, at the time, the sole supplier of gasoline into Nigeria.
“We agreed on the sale of a 20 percent stake at a value of $2.76 billion. Of this, we agreed that they will only pay $1 billion while the balance will be recovered over a period of 5 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 thousand 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.
“We subsequently gave them a 12-month period for them 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 percent. These events have been widely reported by both parties.
“It is, therefore, inaccurate to claim that NNPCL facilitated a $1 billion investment amid liquidity challenges.
“Like all business partners, NNPCL invested $1 billion in the refinery to acquire an ownership stake of 7.24 percent. That is beneficial to its interests,” the Dangote Group statement said.
This recent development highlights the complexities of partnerships in Nigeria’s oil and gas industry, where transparency and accurate communication are essential for maintaining trust.
