Regarding a recent report attributed to the Nigerian National Petroleum Company Limited (NNPCL) that their choice to obtain a $1 billion loan backed by its crude was crucial in helping the Dangote refinery during liquidity issues, we have received a lot of questions from the media and other interested parties.
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To be clear, this is not accurate; $1 billion is just around 5% of the total amount invested in the construction of the Dangote Refinery. Since NNPCL was the biggest offtaker of Nigerian crude and, at the time, the only supplier of petrol into Nigeria, we recognised their critical position in the business and decided to cooperate with them. We decided to sell 20% of the company for $2.76 billion. We decided that they would only pay $1 billion of this, with the remaining amount to be recouped over five years from dividends owed to them and deductions on the crude oil they supply us.
We wouldn’t have offered them such lenient terms for payments if we were having trouble with cash. The refinery was in the pre-commissioning phase as of 2021, the year the agreement was signed. Furthermore, this deal would have been cash-based rather than credit-driven if we were having liquidity problems.
Unfortunately, because NNPCL had committed a larger portion of their oil cargoes to financiers with the expectation of better output, which they were unable to fulfil, they were later unable to supply the agreed-upon 300,000 barrels of petroleum per day. Since they were unable to provide the agreed-upon level of crude oil, we then granted them a 12-month term to pay cash for the remaining stock.
This deadline, which ended on June 30, 2024, was missed by NNPCL. Their stock holding was subsequently reduced to 7.24%. Both parties have covered these occurrences extensively. Therefore, it is untrue to say that NNPCL enabled a $1 billion investment in the face of liquidity issues. Like all other corporate partners, NNPCL made a $1 billion investment in the refinery to get a 7.24% ownership stake that would serve its interests.
For the benefit of our stakeholders and the general public, NNPCL continues to be a valued partner in progress. As such, it is essential that all parties involved uphold the facts and contextualise the story appropriately in order to direct the media to report truthfully. Chiejina Anthony Chief Communications and Branding Officer for the Group December 18, 2024
