Dangote Refutes NNPCL’s $1 Billion Loan Claim

The Dangote Group has refuted claims by the Nigeria National Petroleum Company Limited (NNPCL) that it provided a $1 billion crude-backed loan to support the Dangote Refinery.

According to Anthony Chiejina, the Group’s Chief Branding and Communications Officer, this claim is misleading, as the $1 billion was an investment by NNPCL to acquire a stake in the refinery.

In a statement on Wednesday, Chiejina clarified that NNPCL had agreed to pay $1 billion as part of a $2.76 billion deal to purchase a 20% stake in the refinery. However, NNPCL’s inability to meet the terms of the agreement resulted in its stake being reduced to 7.24%.

“We have received numerous inquiries from the media and stakeholders seeking clarification on the report attributed to NNPCL,” the statement began. “We would like to clarify that this is a misrepresentation. The $1 billion represents just 5% of the total investment in building the Dangote Refinery.”

Chiejina explained that the partnership with NNPCL was formed due to its strategic role as the largest buyer of Nigerian crude oil and, at the time, the sole supplier of gasoline in the country. The agreement stipulated that NNPCL would pay $1 billion upfront, with the remaining balance to be recovered over five years through crude oil supply deductions and dividends.

“If we were facing liquidity challenges, we would not have provided such generous payment terms. As of 2021, the refinery was still in its pre-commissioning phase, and any liquidity issues would have required a cash-based agreement rather than a credit arrangement,” the statement added.

NNPCL later failed to supply the agreed 300,000 barrels of crude oil per day, citing commitments to other financiers and lower-than-expected production. After granting NNPCL a 12-month extension to pay the remaining balance in cash, the company missed the deadline, which expired on June 30, 2024. Consequently, its stake in the refinery was revised to 7.24%.

“It is inaccurate to claim that NNPCL facilitated a $1 billion investment due to liquidity challenges,” Chiejina stated. “NNPCL invested $1 billion in the refinery to acquire a beneficial stake of 7.24%. We value NNPCL as a partner, but it is important for stakeholders to stick to the facts and present accurate information to the public.”

The statement emphasized the need for precise reporting to ensure stakeholders and the public are not misled.

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