The Nigerian National Petroleum Company (NNPC) Limited has reduced its investment in the Dangote Refinery from 20 per cent.
The chief executive officer of Dangote Refinery, Aliko Dangote, who made this known in Lagos on Sunday, revealed that the national oil company now owns only 7.2 per cent stake in the refinery.
Speaking while taking journalists on a tour of the refinery on Sunday, Dangote said NNPC now owns 7.2 per cent of the refinery over failure to pay the balance of their share, which was due in June.
In September 2021, NNPC had acquired a 20 per cent stake in the Dangote Refinery for $2.76 billion.
NNPC had initially financed the 20 per cent stake through a $1.036 billion funding from Lekki Refinery Funding Limited, of which $1 billion was paid to Dangote Refinery and $36 million was for transaction costs.
The remaining $1.76 billion was to be paid through a combination of a $2.5/barrel discount on 300,000 barrels per day of crude oil supplied to the refinery, and 100 per cent of NNPC’s portion of any dividends declared by the refinery.
Dangote said, “NNPC no longer owns a 20 per cent stake in the Dangote refinery. They were meant to pay their balance in June but have yet to fulfil the obligations. Now, they only own a 7.2 per cent stake in the refinery.”
Reacting to the statement by Dangote, the NNPC in a press release on Sunday evening, said the company “made a commercial decision to cap our investment at the amount already paid.”
“Several months ago, we made a commercial decision to cap our investment at the amount already paid. This decision was taken by NNPC Ltd and has no impact on our business.”
“NNPC Limited periodically assesses its investment portfolio to ensure alignment with the company’s strategic goals.
The decision to cap its equity participation at the paid-up sum was made and communicated to Dangote Refinery several months ago,” NNPC spokesman, Olufemi Soneye, said in a statement.
Meanwhile, Dangote said the refinery is now set to roll out its petrol from August 2024, having resolved its crude oil supply issues through the help of the NNPC and the federal government.
He also said the refinery will also resume fertiliser production in two weeks, adding that the crude supply challenge, which affected the supply of petrol from the refinery, was resolved last week after the federal government intervened.
The journalists were on a guided tour of the refinery, which is located at the Lekki Free Trade Zone in Lagos.
Recently the Dangote Industries Limited (DIL) raised an alarm over attempts by international oil companies (IOCs) to frustrate efforts at purchasing crude for the refinery.
“While the Nigerian Upstream Petroleum Regulatory Commission (NUPRC)are trying their best to allocate the crude for us, the IOCs are deliberately and willfully frustrating our efforts to buy the local crude,” the vice president, Oil and Gas at DIL, Devakumar Edwin, told energy editors in June.
“It seems that the objective is to ensure that our Petroleum Refinery fails. It is either they are deliberately asking for ridiculous/humongous premium or, they simply state that crude is not available.
“At some point, we paid $6 over and above the market price. This has forced us to reduce our output as well as import crude from countries as far as the US, increasing our cost of production.”
Beyond resolving the crude supply issues and announcing plans to roll out petrol in August, Alhaji Dangote also told journalists that the refinery’s fertiliser unit would resume production in two weeks.
This would give farmers more access to fertiliser for their farm products.
Dangote said that there was a massive request for fertiliser from Nigerians and the rest of Africa, so his group had no choice but to respond positively.