Liquidity Challenges: Dangote Refinery Faults NNPC’s $1bn Loan Claims

In a statement on Wednesday night, the private oil refinery believed to be worth about $20 billion said the claims by the NNPC were not true.

In the disclosure made available to Business Post, the Group Chief Branding and Communications Officer of Dangote, Mr Anthony Chiejina, said, “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.”

“Our decision to enter into a partnership with NNPCL was based on recognition of their strategic position in the industry as the largest off-taker 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 $2.76 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 per cent. 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 per cent stake that is beneficial to its interests,” he explained.

Mr Chiejina noted that, “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.”