The Nigerian National Petroleum Company (NNPC) Limited has explained why it holds only a 7.2% equity in the $19 billion Dangote Refinery, instead of the widely speculated 20%.
In a statement released on Sunday, Femi Soneye, the Chief Corporate Communications Officer of NNPC, addressed the company’s recent decision regarding its investment in the Dangote Refinery.
Soneye said that the decision to reduce their investment was carefully considered and communicated several months ago to Aliko Dangote.
Dangote mentioned to newsmen on Sunday that NNPC no longer holds a 20% stake in the refinery.
He explained that this change occurred because NNPCL failed to pay the balance of their share, which was due in June.
Reacting, NNPC said:
“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 said.
Backstory
Nairametrics earlier reported that the CEO of Dangote Refinery, Aliko Dangote, announced that the Nigerian National Petroleum Corporation (NNPC) Limited no longer holds a 20% stake in the refinery.
Speaking at a media event at the refinery on Sunday, Dangote explained that the NNPC’s share has been reduced to 7.2% because the corporation failed to pay the balance of their share, which was due in June.
According to Dangote, NNPC has only paid purchase consideration for 7.2% and was expected to pay the balance in June, however, they declined to proceed beyond the 7.2% stake.
“The agreement was actually 20% which we had with NNPC and they did not pay the balance of the money up till last year then we gave them another extension up till June (2024) and they said that they would remain where they have already paid which is 7.2%. So NNPC, the government, owns only 7.2%, not 20%.” Dangote stated.
The statement is a surprise to most Nigerians who for years have been told by the government that it had a 20% stake in the refinery.
Earlier this year, Nairametrics reported that the 2022 audited financial statement of NNPC contained information which showed that it had acquired a 20% stake in the Dangote refinery for $2.76 billion 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.
What you should know
The Dangote Refinery is a massive oil project located in the Lekki Free Zone, Lagos, Nigeria, boasting a capacity of 650,000 barrels per day (BPD). Owned by the Dangote Group, it aims to become Africa’s largest oil refinery and the world’s biggest single-train facility.
The refinery is expected to generate 9,500 direct jobs and an additional 25,000 indirect jobs, providing a substantial economic boost to the region.
Once fully operational, the refinery will produce approximately 50 million litres of petrol and 15 million litres of diesel daily, equating to 10.4 million tonnes of petroleum products annually.
It will also yield 4.6 million tonnes of diesel and 4 million tonnes of jet fuel per year.