The Dangote Group has debunked recent claims attributed to the Nigerian National Petroleum Company Limited (NNPCL) suggesting that a $1 billion loan secured by the company was instrumental in addressing liquidity challenges during the construction of the Dangote Refinery.
In a statement released by Anthony Chiejina, Group Chief Branding and Communications Officer of the Dangote Group, the company clarified that the $1 billion in question constitutes just 5% of the total investment required to build the refinery, discrediting any suggestions of financial struggles.
Chiejina explained that the decision to enter into a partnership with NNPCL was based on the company’s strategic position in the industry as the largest offtaker of Nigerian crude and the sole supplier of gasoline to Nigeria at the time. As part of this agreement, NNPCL acquired a 20% equity stake in the Dangote Refinery for a total value of $2.76 billion.
“Of this amount, NNPCL agreed to pay $1 billion upfront, with the remaining balance to be recovered over five years through deductions on crude oil supplied to the refinery and from dividends due to NNPCL,” the statement read.
Chiejina emphasized that the arrangement was credit-driven, not cash-based, a clear indication that the refinery was not facing liquidity challenges.
The agreement was signed in 2021 when the refinery was still in its pre-commissioning stage.
The Dangote Group further disclosed that NNPCL faced challenges in meeting its obligations under the agreement.
The company had committed to supplying 300,000 barrels of crude oil per day to the refinery but was unable to fulfill this due to pre-existing commitments to other financiers and lower-than-expected crude production.
To address these setbacks, Dangote Group extended a 12-month grace period for NNPCL to pay the balance of its equity in cash. However, when NNPCL failed to meet the deadline by June 30, 2024, their equity share was revised downward from 20% to 7.24%.
“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,” Chiejina noted.
The Dangote Group stressed that NNPCL’s $1 billion investment was simply part of its acquisition of a 7.24% stake in the refinery, not a loan to resolve financial difficulties.
NNPCL remains a “valued partner in progress,” but the company called on stakeholders and the media to report accurately, ensuring that the narrative is presented in its proper context for the benefit of the public.
The Dangote Group reaffirmed its commitment to transparency and the success of the Dangote Refinery, which remains a transformative project for Nigeria’s energy sector.
