Dangote Refinery Denies NNPC’s $1 Billion Loan Claim Amid Liquidity Controversy

The Dangote Refinery, valued at approximately $20 billion, has categorically denied claims by the Nigerian National Petroleum Company (NNPCL) Limited that it provided a $1 billion loan to rescue the refinery during a liquidity crisis. In a statement issued on Wednesday night, Dangote’s Group Chief Branding and Communications Officer, Mr. Anthony Chiejina, termed the assertion a “misrepresentation of the situation.”

According to Mr. Chiejina, the $1 billion investment by the NNPCL represents only 5% of the total capital committed to the project. He explained that the partnership with NNPCL was strategic, recognizing the company’s role as Nigeria’s largest off-taker of crude oil and primary supplier of gasoline at the time. “If we were struggling with liquidity challenges, we wouldn’t have provided such generous payment terms,” he added, further stressing that the agreement was credit-driven, not cash-based.

Details of the Partnership Agreement Between Dangote and NNPCL

The collaboration between Dangote Refinery and NNPC was formalized in 2021, when the refinery was still in its pre-commissioning phase. Under the agreement, NNPC acquired a 20% equity stake valued at $2.76 billion. Of this amount, $1 billion was paid upfront, while the remaining balance was to be recouped over five years through crude oil supply deductions and dividends.

However, challenges arose as NNPC struggled to meet its crude oil supply obligations. According to Dangote Refinery, NNPC was unable to deliver the agreed 300,000 barrels per day due to prior commitments of crude cargoes to financiers, a situation exacerbated by lower-than-expected production levels. This failure prompted Dangote Refinery to revise NNPC’s equity share to 7.24% after the company missed a cash payment deadline set for June 30, 2024.

Clarifying Misrepresentations

Dangote Refinery emphasized that the $1 billion investment was not a bailout but a strategic equity purchase. “NNPC invested $1 billion to acquire a 7.24% ownership stake in the refinery, which is beneficial to its interests,” Mr. Chiejina clarified. He further noted that the terms of the agreement and subsequent developments have been transparently reported by both parties, making the claims of financial assistance misleading.

The company also pointed out that the partnership was established on mutual business interests rather than financial dependency. Mr. Chiejina urged all stakeholders to present the facts accurately, stressing the importance of proper context in media reporting to maintain public trust and stakeholder confidence.

Equity Stake Revision and Current Status

Following NNPCL’s failure to meet the June 30th, 2024 deadline for the cash payment, their equity stake in the refinery was significantly reduced from 20% to 7.24%. This development marks a substantial shift in the partnership structure between the two entities.

The revised ownership structure reflects the evolving nature of the partnership and demonstrates the refinery’s commitment to maintaining transparent business operations. Both parties have publicly acknowledged these changes, with the reduction in NNPCL’s stake serving as a direct consequence of their inability to fulfill the agreed-upon terms.

NNPC’s Role and Future Collaboration

Despite the disagreements, Dangote Refinery reiterated its commitment to maintaining a productive partnership with NNPCL. “NNPCL remains our valued partner in progress,” Mr. Chiejina stated, highlighting the mutual benefits of their collaboration. He acknowledged the critical role NNPCL plays in the Nigerian oil industry and expressed optimism about future engagements.

The refinery called on all parties to focus on shared goals, particularly as Nigeria continues to tackle its energy challenges. The management emphasized that transparency and factual reporting are essential to fostering a collaborative environment that benefits all stakeholders, including the Nigerian public.

This development underscores the importance of clear communication in corporate partnerships, particularly in an industry as pivotal as oil and gas. As stakeholders await further clarifications, the Dangote Refinery’s statement serves as a critical reminder of the need to separate fact from speculation in public discourse.