Aliko Dangote, the Chief Executive Officer of Dangote Refinery, announced that the Nigerian National Petroleum Corporation (NNPC) Limited’s stake in the refinery has dropped from the previously held 20% to a mere 7.2%.
This reduction is attributed to NNPC’s failure to pay the balance of their shareholding dues, which was expected last month in June.
Dangote disclosed this during a media parley held at the refinery on Sunday, shedding light on the current ownership structure and the financial commitments made by the national oil company.
“The agreement was actually for 20%, but NNPC did not pay the balance of the money up till last year. We then gave them another extension up to June 2024, and they decided to remain at the 7.2% stake for which they had already paid,” Dangote stated.
This revelation has come as a surprise to many Nigerians who had been under the impression that the NNPC maintained a 20% stake in the refinery.
The reduction in ownership highlights the financial challenges faced by the state-owned oil company.
In 2021, the Group Managing Director of NNPC, Mele Kyari, had championed the decision to acquire a stake in the Dangote Refinery, citing the profit potential and the strategic importance of having a say in the refinery’s operations.
The investment was seen as critical to ensuring energy security for Nigeria and supporting the country’s fiscal stability.
Earlier this year, NNPC’s audited financial statements indicated that the corporation had acquired a 20% stake in Dangote Refinery for $2.76 billion.
This included a $1.036 billion funding from Lekki Refinery Funding Limited, of which $1 billion was paid to Dangote Refinery and $36 million covered transaction costs.
During the media parley, Dangote addressed various issues, including the challenges of supplying crude to the refinery.
He confirmed that the refinery has been sourcing crude from the United States and Brazil, while also noting the government’s intervention to resolve the supply issues.
The Dangote Refinery, located in the Lekki Free Zone, Lagos, is a massive project with a capacity of 650,000 barrels per day (BPD). Once fully operational, it aims to become Africa’s largest oil refinery and the world’s largest single-train facility.
The refinery is expected to generate approximately 9,500 direct jobs and an additional 25,000 indirect jobs, significantly boosting the local economy.
In addition to refining, the facility includes a fertiliser plant that will use by-products from the refinery as raw materials, further enhancing its economic and environmental impact.
The refinery is projected to produce around 50 million litres of petrol and 15 million litres of diesel daily, along with significant quantities of jet fuel and other petroleum products.
The reduction of NNPC’s stake underscores the financial complexities surrounding large-scale investments in Nigeria’s oil and gas sector.
As the Dangote Refinery nears full operation, the focus will be on how effectively it can address the country’s energy needs and contribute to economic growth, despite the challenges faced by its stakeholders.
