Dangote Refutes NNPCL’s $1 Billion Liquidity Support Claims: Sets Record Straight on Refinery Investment

In response to a recent report attributed to the Nigerian National Petroleum Company Limited (NNPCL), which claimed that its $1 billion loan secured against crude oil was pivotal in alleviating liquidity challenges at the Dangote Refinery, the Dangote Group has issued a statement debunking the claim as a misrepresentation of the facts.

Anthony Chiejina, Group Chief Branding and Communications Officer of Dangote Industries, clarified, “The assertion that NNPCL’s $1 billion loan supported the refinery during liquidity challenges is misleading. To put this in perspective, $1 billion represents merely 5% of the total investment in the refinery project.”

Chiejina further explained that the decision to partner with NNPCL was strategic, recognizing its role as the largest buyer of Nigerian crude oil and, at the time, the sole supplier of gasoline in the country. The agreement 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, with the balance to be recovered over five years through crude oil supplies and dividend payments.

“If liquidity challenges were an issue, we would not have agreed to such favorable payment terms. Furthermore, the agreement was signed in 2021 when the refinery was still in its pre-commissioning stage, reinforcing the fact that liquidity concerns were never a factor,” Chiejina stated.

However, challenges emerged when NNPCL failed to deliver the agreed 300,000 barrels of crude oil per day due to existing commitments to other financiers. This shortfall prompted Dangote Industries to offer NNPCL a 12-month grace period to pay the outstanding balance in cash. When the deadline expired on June 30, 2024, without payment, NNPCL’s equity stake was revised downward to 7.24%.

“The events leading to this revision have been transparent and well-documented. It is, therefore, inaccurate to suggest that NNPCL facilitated a $1 billion investment as part of a liquidity bailout. Instead, NNPCL made a $1 billion equity investment for its 7.24% ownership in the refinery,” Chiejina emphasized.

Despite the setbacks, Dangote Industries reiterated its commitment to its partnership with NNPCL. “NNPCL remains a valued partner in progress. However, it is crucial for all stakeholders to adhere to the facts and present the narrative accurately to guide media reporting for the benefit of the public and all stakeholders,” the statement concluded.

This clarification aims to dispel any misinformation and ensure that the true context of the NNPCL-Dangote Refinery partnership is understood.