The Nigerian National Petroleum Company (NNPC) Limited has reduced its stake in the Dangote Refinery from 20% to 7.2%.
Aliko Dangote, CEO of Dangote Refinery, announced this during a media tour in Lagos on Sunday, citing NNPC’s failure to pay the remaining balance of their share due in June.
In September 2021, NNPC acquired a 20% stake in the refinery for $2.76 billion, partially financed by $1.036 billion from Lekki Refinery Funding Limited. Of this, $1 billion went to Dangote Refinery, and $36 million covered transaction costs. The remaining $1.76 billion was to be paid through a $2.5/barrel discount on 300,000 barrels per day of crude oil and NNPC’s share of any declared dividends.
“NNPC no longer owns a 20% stake in the Dangote refinery. They were supposed to pay their balance in June but haven’t. Now, they only own a 7.2% stake,” Dangote said.
In response, NNPC stated they made a “commercial decision to cap our investment at the amount already paid.” Olufemi Soneye, NNPC’s spokesperson, explained, “NNPC periodically reviews its investments to align with strategic goals. The decision to cap equity participation at the paid-up sum was communicated to Dangote Refinery months ago.”
Dangote also announced the refinery would start petrol production in August 2024 after resolving crude oil supply issues with NNPC and the federal government. Fertilizer production will resume in two weeks to meet high demand from Nigerian and African farmers.
During the tour, journalists learned of challenges faced by Dangote Industries Limited (DIL) in securing local crude oil from international oil companies (IOCs). Devakumar Edwin, Vice President of Oil and Gas at DIL, revealed IOCs had been obstructing efforts to purchase local crude. “They either demand unreasonable premiums or claim crude is unavailable,” Edwin said, forcing DIL to import crude from the US, increasing costs.
Despite these hurdles, Dangote assured the refinery is on track to meet production targets, positively impacting petrol availability and fertilizer supply.
