NNPC’s 20% stake in Dangote Refinery will guarantee energy security in Nigeria -Kyari

 

THE Group Managing Director (GMD) of the Nigerian National Petroleum Corporation (NNPC) Mele Kyari on Tuesday said the corporation’s planned 20 per cent equity stake in the Dangote Refinery would guarantee energy security in the country.

Kyari confirmed that NNPC was in talks with lenders to borrow on the back of its cash flow to buy the 20 per cent stake in the 650,000 barrel per day (bpd) refinery.

The NNPC boss did not put a dollar figure on the stake, but he said the refinery was worth an estimated $19 billion.

Kyari, who spoke in a monitored television programme in Abuja, explained that the corporation was not going to take money from the federation account to buy the stake.

Rather, according to him, a cash flow business model with a self-funding modality would be explored for the investment.

“On Dangote Refinery, we are not going to borrow money from the federation account to fund our stake in the business, rather we are going to explore opportunities in the cash flow of the business,” Kyari said.

He described the cash flow option as a viable business model which would guarantee return for investment.

The NNPC boss further stated that because of the financial model of the refinery, several banks had already indicated interest in lending support.

“This is a huge global business which follows certain global best practices. We are following all the required processes. No bank will lend to you if these processes are not followed,” he said, adding that the NNPC would seek the approval of the Federal Executive Council to perfect its equity stake in Dangote Refinery.

Kyari also explained that the investment in the refinery was in line with the plan to expand NNPC’s investment portfolio through equity stakes in oil and gas businesses.

According to him, the NNPC had a responsibility to ensure energy security in the country.

“Because we are a national oil company, we have the responsibility of ensuring energy security in our country and there is no way we can have that unless we have a say in the board of institutions such as this.”






     

     

    Speaking on the benefits of the Dangote Refinery to Nigeria, Kyari said, “It takes out the cost of freight for the petroleum product because of the proximity of supply and base. Buying in Europe takes almost 14 days to arrive in Nigeria, hence that cost and uncertainties are also removed.

    “It also has a good cost recovery model because of the business template. With the refinery coming on stream, Nigeria is also fired up for energy security and a hub for petroleum export in the sub-region and in the continent. This is why we are keen on energy security.”

    The NNPC would ensure Dangote Refinery opened its books despite the corporation having stakes in its the company, Kyari said.

    He further disclosed that Dangote Refinery would buy crude oil in dollar because of the global business nature of the business, but the plant would sell petrol in the country in naira.

    Harrison Edeh is a journalist with the International Centre for Investigative Reporting, always determined to drive advocacy for good governance through holding public officials and businesses accountable.

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