The Nigerian National Petroleum Company (NNPC) Limited has confirmed reports that it no longer owns 20 percent equity stakeholding in the 650,000 barrels per day capacity Dangote Refinery and Petrochemicals Limited.
The company said its decision to review its initial interest to acquire 20 percent equity in the private refining company, which has since been communicated to Dangote Refinery management, was deliberate in line with its policy on investment.
Apparently determined to stoke the fire of the raging controversy trailing the operations of the Dangote Refinery in recent times, the Chairman and Chief Executive Officer, Aliko Dangote, had alleged that the national oil company no longer owns a 20 percent stake in the 650,000 per day capacity private refinery.
“NNPC no longer owns 20 percent stake in the Dangote refinery. They were meant to pay their balance in June, but have yet to fulfil their obligations. Now, they only own a 7.2 percent stake in the refinery,” Dangote declared on Friday.
In January this year, the NNPC Ltd announced the acquisition of 20 percent equity stakeholding in Dangote Refinery valued at about $2.76 billion.
The acquisition, the company explained, was through a $1.036 billion (N426.2 billion) funding from the Lekki Refinery Funding Limited, out of which $1 billion was paid to Dangote Refinery, with $36 million as transaction costs.
At the time, NNPC Ltd said it was committed to an arrangement to supply Dangote Refinery about 35,000 barrels of crude oil per day (bpd) as part of the agreement to defray the outstanding balance of the loan.
The interest rate for the facility was a three-month LIBOR plus 6.125 percent scheduled to commence on August 30, 2023.
In addition to the 35,000 barrels per day forward crude oil sale, the NNPC said it also has a 90,000 bpd oil-for-debt financing deal of $3.3 billion with AFREXIMBANK.
The completion of the outstanding payment to Dangote Refinery, the NNPC Ltd said, would be through a $2.5 per barrel discount on the official crude oil selling price per barrel on 300,000 barrels per day and 100 percent of NNPC’s portion of any dividend declared by the refinery throughout the repayment period.
But Dangote accused the NNPCL of reneging on the loan repayment agreement as the company was unable to meet its obligations when the repayment of the balance became due last June.
Dangote claimed the NNPC now owned only 7.2 percent against the 20 percent stake previously announced to the public. He clarified that while the NNPC pledged to provide the funds as part of the deal, the company failed to meet its obligations, thereby reducing its stake in the $19bn refinery to only 7.2 percent.
However, in its reaction to the allegation by Dangote, the NNPC said in a statement by its spokesman, Femi Soneye, on Sunday that decision not to go ahead with the payment for the balance of investment on the 20 percent equity stake was in line with its deliberate practice to periodically assess its investment portfolio to ensure alignment with the company’s strategic goals.
Specifically, the company said the decision to cap its equity participation at the paid-up sum was made and communicated to Dangote Refinery management several months ago.
“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,” Sonoye said in a terse statement.
Since Dangote Refinery announced its plan to commence operations in the newly built plant this year, it has been struggling to mobilize enough supply of crude oil to sustain its operations. In a bid to go ahead with its plans, the Dangote has had to resort to importation of crude oil from abroad to meet its requirement.
Recently, the company stirred a huge controversy when it blamed the lack of supply of crude oil for its operations on the conspiracy between multination oil companies and other oil marketers as well as the downstream/midstream petroleum industry regulatory authority, the Nigerian Midstream Downstream Petroleum Regulatory Authority (NMDPRA) against its interest.
While the multinational Oil companies raise their crude oil price per barrel above the prevailing approved prices, the company accused the NMDPRA of approving import licences to oil marketers to import off-spec petroleum products to compete with refined products from its refinery.
Both the NMDPRA and oil marketers have variously denied the allegations against them, rather claiming the allegations were part of the scheme by Dangote to foist a monopoly on the industry with its refinery.