The Dangote Group and the Nigerian National Petroleum Company Limited (NNPCL) have found themselves at odds over a contentious $1 billion crude oil-backed loan.
This dispute has resurfaced barely 24 hours after NNPCL spokesperson Olufemi Soneye announced that the state-owned oil firm had secured the loan to support the Dangote Refinery during liquidity challenges.
However, Anthony Chijiena, spokesperson for the Dangote Group, refuted these claims, labeling them as "misinformation." He clarified that the $1 billion loan represents merely five percent of the total investment in the 650,000 barrels per day refinery, which is touted as Africa's largest oil refinery and the world's biggest single-train facility.
Chijiena further explained, "It is inaccurate to say NNPCL facilitated $1 billion for Dangote Refinery amid liquidity challenges." He elaborated that NNPCL had initially proposed a 20 percent stake investment valued at $2.76 billion in the refinery, but this did not materialize.
Instead, NNPCL invested $1 billion, equating to a 7.24 percent 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," Chijiena stated. He added, "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."
The Dangote Group emphasized that if they were indeed struggling with liquidity issues, the agreement would have been cash-based rather than credit-driven.
The company also highlighted that NNPCL failed to meet its commitment to supply the agreed 300,000 barrels a day of crude, as much of their crude cargoes were committed to financiers with expectations of higher production, which were not met. As a result, NNPCL's equity share was revised down to 7.24 percent after failing to meet the deadline for payment, which expired on June 30th, 2024.
"These events have been widely reported by both parties," Chijiena noted, showing the inaccuracy of claims that NNPCL facilitated a $1 billion investment amid liquidity challenges.
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