NNPC’s stake in Dangote Refinery reduces to 7.2 percent

Monday, 15 July 2024 05:12

NNPC’s stake in Dangote Refinery reduces to 7.2 percent

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NNPC’s stake in Dangote Refinery reduces to 7.2 percent

Aliko Dangote, Africa’s richest person and Chairman of Dangote Group, announced on Sunday that the Nigerian National Petroleum Company (NNPC) Limited's stake in the Dangote Petroleum Refinery has dropped significantly from 20 percent to 7.2 percent. Speaking during a press briefing at the refinery in Lagos, Dangote attributed the reduction to NNPC's failure to pay the balance of their share, which was due in June.

“NNPC no longer owns a 20 percent stake in the Dangote refinery. They were meant to pay their balance in June, but have yet to fulfill the obligations. Now, they only own a 7.2 percent stake in the refinery,” Dangote stated.

In September 2021, NNPC acquired a 20 percent interest in the refinery for $2.76 billion. However, the balance of $1.76 billion, which was supposed to be paid upon completion of the refinery project or at an agreed date, remains unpaid. NNPC's investment was held by NNPC Greenfield, a subsidiary created for this purpose.

Further details revealed that the national oil company was expected to supply 300,000 barrels of crude per day to the refinery, backed by a $3.3 billion loan from Afreximbaank, to be repaid with crude oil.

In January, the global Extractive Industry Transparency Initiative (EITI) raised concerns about NNPC's stake in the refinery, highlighting the need for clarity on interest rates, repayment schedules, and valuation of the crude-backed loans. Despite NNPC joining EITI in 2019 to enhance transparency, questions about its financial dealings remain.

Meanwhile, the Dangote refinery, which commenced production on January 12, is increasing its output of Premium Motor Spirit (PMS), commonly known as petrol. Sales to local distributors are expected to begin in August. The refinery is projected to produce 500,000 barrels per day (bpd) by August, 550,000 bpd by the end of the year, and reach its full capacity of 650,000 bpd by the first quarter of 2025.

Additionally, during the briefing, Dangote announced plans to list the refinery’s fertilizer and petrochemical business in the first quarter of 2025.