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Dangote Refinery, NNPC clash again over $1bn loan
Dangote Group, owners of Dangote Refinery, and the Nigerian National Petroleum Company Limited (NNPCL) have have renewed their disagreement over a $1 billion crude-for- loan deal.
The NNPCL Chief Information Officer, Olufemi Soneye stirred the hornet’s nest on Tuesday when he said the state-owned oil firm secured a $1 billion loan backed by crude to support the Dangote Refinery during liquidity challenges.
However, Dangote Group spokesman, Anthony Chijiena, in a statement titled: “Addressing NNPCL Misinformation,” issued on Wednesday clarified that the $1 billion crude-backed loan is about five percent of the total investment that went into building the 650,000 barrels per day refinery.
He said it was inaccurate to say NNPCL facilitated $1 billion for Dangote Refinery amid liquidity challenges.
Chijiena added that NNPCL had proposed a 20 percent stake investment valued at $2.76 billion in the Dangote Refinery, but that didn’t materialise.
He noted that NNPCL invested $1 billion which amounts to 7.24 percent equity stake in the refinery.
The two organisations have clashed repeatedly over the deal.
The statement read: “We have received numerous inquiries from the media and other concerned stakeholders seeking clarification on a recent report attributed to the Nigerian National Petroleum Company Limited (NNPCL) that their decision to secure a $1 billion 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% of the investment that went into building the Dangote Refinery.
READ ALSO: Dangote refinery blasts NNPC for failing to deliver supply commitment
“Our decision to enter into a partnership with NNPCL was based on recognition of their 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% 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 a period of 5 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 at 2021 when the agreement was signed, the refinery was at the pre-commission stage. In addition, if we were struggling with liquidity issue, this agreement would have been cash based rather than credit driven.
“Unfortunately, NNPCL was later unable to supply the agreed 300 thousand barrels a day of crude given that they had committed a greater part of their crude cargoes to financiers with the expectation of higher production which they were unable to achieve.
“We subsequently gave them a 12-month period 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%. These events have been widely reported by both parties.
“It is, therefore, inaccurate to claim that NNPCL facilitated a $1 billion investment amid liquidity challenges. Like all business partners, NNPCL invested, $1 billion in the Refinery to acquire an ownership stake of 7.24% 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.”
Babajide Okeowo
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