Dangote Group has strongly refuted claims made by the Nigerian National Petroleum Company Limited (NNPCL) regarding a $1 billion loan, describing the assertion as a misrepresentation of their partnership agreement and events surrounding the funding of the Dangote Refinery.
In a press statement released today, Dangote clarified that the $1 billion mentioned by NNPCL represents merely 5% of the total investment required to construct the refinery, dismissing any implication that the funds were crucial to resolving liquidity challenges faced during the project.
Clarifying the Terms of the Stake Sale
Dangote disclosed that the agreement with NNPCL involved the sale of a 20% equity stake in the refinery valued at $2.76 billion. Of this amount, NNPCL was required to pay $1 billion upfront, while the balance would be recovered over a five-year period through deductions on crude oil supplied to the refinery and dividend payments.
“If we were struggling with liquidity challenges, we wouldn’t have given them such generous payment terms,” Dangote emphasised.
At the time of signing the agreement in 2021, the refinery was still in its pre-commissioning phase, further disproving claims that the NNPCL loan was critical for project financing.
NNPCL’s Operational Shortcomings
The statement also shed light on NNPCL’s inability to fulfil its commitment of supplying 300,000 barrels of crude oil per day to the refinery. Instead, NNPCL redirected significant portions of its crude oil volumes to other financiers, aiming to boost production levels that ultimately failed to materialise.
To address NNPCL’s cash flow challenges, Dangote extended a 12-month grace period for payment of the remaining equity balance. Despite this concession, NNPCL missed the payment deadline, which expired on 30 June 2024. Consequently, NNPCL’s equity stake in the refinery was adjusted downward from 20% to 7.24%.
Setting the Record Straight
Dangote firmly rejected NNPCL’s narrative that it played a pivotal role in funding the refinery through a $1 billion investment. “It is inaccurate to claim that NNPCL facilitated a $1 billion investment amid liquidity challenges,” the company stated, adding that NNPCL’s investment represents its 7.24% ownership stake, negotiated on mutually beneficial terms.
The group called on stakeholders and the media to ensure accurate reporting, underscoring the importance of context in understanding the partnership dynamics.
NNPCL as a Valued Partner
Despite the dispute, Dangote reiterated its commitment to working collaboratively with NNPCL. “NNPCL remains our valued partner in progress,” the statement concluded, urging the public to rely on factual information for balanced discourse.