Federal government has given Nigerian National Petroleum Corporation (NNPC) the green light to acquire a 20% stake in Dangote’s oil refinery for $2.76 billion, junior oil minister Timipre Sylva said on Wednesday.

The 650,000-barrel-per-day oil refinery, owned by Africa’s richest man Aliko Dangote, is under construction in Lagos, the biggest city in the most fuel-consuming nation in the region. The refinery is scheduled for commissioning by January.

Sylva said the government approved NNPC’s acquisition at a Cabinet meeting, he told reporters in Abuja, adding that the country also awarded contracts for the modernisation of two state-owned refineries.

NNPC had said its move to work with private companies was in line with safeguarding the country’s energy security and would not undercut plans to rehabilitate its own refineries.

NNPC said in June it had signed term sheets with Dangote Group for the stake in its $19 billion oil refinery and is in talks with banks to borrow to buy the stake but would require government approval of the plan.

The Dangote Group has previously said NNPC and three other firms had approached it regarding a stake purchase, to be able to secure crude supply agreements.

Nigeria, Africa’s biggest crude oil exporter, imports virtually all its fuel due to moribund state refineries, which has prompted NNPC’s interest in Dangote’s oil refinery.

In March, Nigeria approved $1.5 billion of spending on the modernisation of the Port Harcourt oil refinery and awarded a contract to Italy’s Tecnimont.

Sylva said 15% of the contract sum has been paid and work has started in Port Harcourt. He added that the Cabinet approved contract awards for the upgrade of the Warri and Kaduna refineries to Saipem SpA and Saipem Contracting Ltd for $1.484 billion.

Reuters