The Dangote Petroleum Refinery has stated that the Nigerian National Petroleum Company Limited provided inaccurate and misleading information about the details of its $1 billion investment in the refinery’s operations, emphasising that the facts were misrepresented in a way that misled stakeholders and the general public about the nature and scope of the investment.
The refinery highlighted that the $1 billion crude-backed loan represents only 5% of the total expenditure in establishing the 650,000 barrels per day refinery.
Mr. Olufemi Soneye, NNPCL’s Chief Corporate Communications Officer, stated on Monday at a stakeholders engagement meeting that the national oil company has acquired a $1 billion loan guaranteed by crude oil to enable the start-up of the 650,000 barrels per day refinery.
He stated that the contribution reflected the firm’s commitment to fostering public-private partnerships to promote economic growth.
However, in a statement issued on Wednesday after receiving several enquiries from concerned stakeholders, Group Chief Branding and Communications Officer Anthony Chiejina dismissed NNPCL’s assertion as “misinformation.”
According to him, it is incorrect to state that NNPCL facilitated $1 billion for Dangote Refinery despite liquidity issues.
The statement titled, “Addressing NNPCL’s Misinformation,” read, “We have received numerous enquiries from the media and other concerned stakeholders seeking clarification on a recent report attributed to the Nigerian National Petroleum Company Limited that their decision to secure a $1bn loan backed by its crude was instrumental in supporting the Dangote refinery during liquidity challenges.
“We would like to clarify that this is a misrepresentation of the situation, as $1bn is just about 5 percent of the investment that went into building the Dangote Refinery.”
Chijiena further stated that NNPCL proposed a 20% equity investment in the Dangote Refinery valued at $2.76 billion in 2021, but this did not materialise due to NNPCL’s inability to produce the agreed-upon 300,000 barrels of crude per day.
He also mentioned that NNPCL was able to invest $1bn, which amounts to a 7.24 percent equity value.
The statement continued, “Our decision to enter into a partnership with NNPCL was based on recognition of their strategic position in the industry as the largest offtake of Nigerian crude and, at the time, the sole supplier of gasoline into Nigeria.
“We agreed on the sale of a 20 percent stake at a value of $2.76bn. Of this, we agreed that they will only pay $1bn while the balance will be recovered over a period of 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.
“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.
It noted that the national oil corporation was given a 12-month grace period to satisfy its commitments, which were still not met, resulting in a 7.5% equity share reduction.
He explained, “We subsequently gave them 12 months 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 percent. These events have been widely reported by both parties.
“It is, therefore, inaccurate to claim that NNPCL facilitated a $1bn investment amid liquidity challenges. Like all business partners, NNPCL invested $1bn in the refinery to acquire an ownership stake of 7.24 percent, which 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.”
