Dangote Refinery Refutes NNPC’s $1 Billion Loan Claim

Dangote Refinery has addressed the recent claim by the Nigerian National Petroleum Company (NNPC) Limited regarding a $1 billion loan backed by crude, reportedly secured to support the refinery during liquidity challenges.

In a statement signed by Anthony Chiejina, Group Chief Branding and Communications Officer of Dangote Group, Dangote Refinery refutes NNPC $1 billion loan claim, describing it as a misrepresentation of the facts.

Dangote Refinery: $1 Billion Represents a Fraction of Total Investment

The statement clarified: “This is a misrepresentation of the situation, as $1 billion constitutes only about 5% of the total investment that went into the construction of the Dangote Refinery.

“Our partnership with NNPCL was founded on their strategic role in the oil and gas sector as the largest off-taker of Nigerian crude oil and, at the time, the sole supplier of petrol to the country.”

NNPC’s Original Statement on the $1 Billion Loan

Earlier, Olufemi Soneye, NNPC Ltd’s Chief Corporate Communications Officer, had stated during an energy stakeholder engagement in Abuja that the $1 billion loan was pivotal in addressing liquidity challenges and supporting the establishment of Nigeria’s first private refinery.

He highlighted the initiative as evidence of NNPC’s commitment to fostering public-private partnerships for national development.

Dangote Clarifies Partnership Details

Dangote Refinery further refuted this claim, explaining that the $1 billion mentioned does not reflect the nature of their agreement. Instead, both parties finalised a deal involving the sale of a 20% equity stake in the refinery, valued at $2.76 billion.

This clarification underscores the scale of investment in the Dangote Refinery and the strategic importance of its partnership with NNPC Ltd, positioning it as a critical driver in Nigeria’s energy sector.

“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 at 2021 when the agreement was signed, the refinery was at the pre-commission stage. In addition, if we were struggling with liquidity issue, 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,” the statement read.

The statement continued: “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 stake that 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.”