THE Dangote Group has countered the Nigerian National Petroleum Company Limited’s (NNPCL) claim that it secured a $1 billion loan backed by crude oil to help the Dangote Refinery come on stream.
In a statement on Wednesday, December 2024, the group’s chief branding and communications officer, Anthony Chiejina, said the NNPCL’s claim was a misrepresentation of facts.
He said the Dangote Group was not struggling with liquidity challenges at the time, stressing that the numerous inquiries received by the company from stakeholders seeking clarification prompted the clarification.
The NNPCL had reportedly said its $1 billion loan backed by crude oil helped the Dangote Refinery to come on stream.
The chief corporate communications officer at NNPCL, Olufemi Soneye, stated this at the Energy Relations Stakeholders Engagement in Abuja on Monday, December 16.
He said, “A strategic decision to secure a $1 billion loan backed by NNPC’s crude was instrumental in supporting the Dangote Refinery during liquidity challenges, paving the way for the establishment of Nigeria’s first private refinery.
“This initiative underscores NNPC’s dedication to fostering public-private partnerships that drive national development.”
In its statement on Wednesday, the Dangote Group described the NNPCL claim as a misrepresentation of facts.
“We would like to clarify that this is a misrepresentation of the situation as $1bn is just about five per cent of the investment that went into building the Dangote Refinery,” the Dangote Group spokesperson stated.
According to him, Dangote Refinery’s decision to enter into a partnership with NNPCL was based on recognition of its 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 five 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,” Chiejina explained.
He stated further that 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,” he stressed.
According to Chiejina, it is unfortunate that NNPCL was later unable to supply the agreed 300 thousand barrels a day of crude given that the state-owned oil company had committed a greater part of its crude cargoes to financiers with the expectation of higher production, which it was unable to achieve.
“We subsequently gave them 12 months 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,” he noted.
Chiejina maintained that it was inaccurate for the NNPCL to claim that it facilitated a $1 billion investment amid liquidity challenges to help Dangote Refinery commence operation.
“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.
“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,” he added.