Dangote Refinery, NNPCL resume fight over $1bn loan

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A $1 billion debt backed by crude oil has caused conflict between the Nigerian National Petroleum Company Limited, or NNPCL, and the Dangote Group, the owners of the Dangote Refinery.

Remember how the state-owned oil company said just 24 hours earlier that it had obtained a $1 billion loan backed by crude to help the Dangote Refinery during liquidity issues? The announcement was attributed to NNPCL spokeswoman Olufemi Soneye.

Anthony Chijiena, a spokesman for the Dangote Group, has called NNPCL’s assertion “misinformation.”

According to the firm, the $1 billion crude-backed loan represents roughly 5% of the overall investment made to construct the refinery, which can produce 650,000 barrels per day.

He asserts that the claim that NNPCL helped Dangote Refinery get $1 billion in the face of liquidity issues is untrue.

According to Chijiena, NNPCL had suggested investing $2.76 billion for a 20 percent share in the Dangote Refinery, but that plan never came to fruition.

He pointed out that NNPCL managed to invest $1 billion, or 7.24 percent of the equity value.

“Our decision to enter into a partnership with NNPCL was based on recognition of their strategic position in the industry as the largest offtaker 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 $2.76 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 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.

“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 percent. 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 percent. That is beneficial to its interests,” the Dangote Group statement said.

ZINGTIE previously reported in September 2024 that NNPCL and Dangote Refinery had a heated argument over the price of petrol.

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