The Dangote Petroleum Refinery and Petrochemicals (DPRP) has debunked recent assertions suggesting it relied on a $1 billion loan from the Nigerian National Petroleum Company Limited (NNPCL) to address financial constraints. According to the refinery’s Chief Branding and Communications Officer, Anthony Chiejina, such reports are gross misrepresentations of the facts.
In a statement issued on Wednesday, Chiejina clarified that the $1 billion referenced in the claims constitutes a mere 5% of the total investment required to establish the refinery, emphasizing that its financial framework remains robust.
Strategic Partnership, Not Financial Dependency
Chiejina highlighted that the refinery’s decision to collaborate with NNPCL was strategic, acknowledging the latter’s position as a key player in the industry and the principal supplier of petrol to Nigeria at the time. The partnership involved the sale of a 20% equity stake in the refinery, valued at $2.76 billion. Of this, NNPCL was to pay $1 billion upfront, with the balance recoverable over five years through crude oil supply deductions and dividend entitlements.
“If we faced liquidity challenges, we wouldn’t have structured such favorable payment terms for NNPCL,” Chiejina noted. “At the time of the agreement in 2021, the refinery was still under construction, with no financial strain to warrant reliance on external loans.”
Crude Supply Shortfalls and Missed Deadlines
The spokesman also revealed that NNPCL struggled to fulfill its commitment to supply 300,000 barrels of crude oil per day. This shortfall was attributed to NNPCL’s prior engagements with financiers, which limited its ability to meet production targets.
To address this, Dangote Refinery extended a 12-month grace period, allowing NNPCL to pay cash for its remaining equity. However, NNPCL failed to meet the revised deadline, which expired on June 30, 2024. Consequently, its equity share in the refinery was reduced to 7.24%.
“These developments have been transparently reported by both parties,” Chiejina added, underscoring that the agreement’s terms and adjustments were made public.
A Financially Independent Venture
The statement reiterated that Dangote Refinery has maintained financial independence throughout its operations, with no need to resort to cash-based agreements for liquidity. The company remains focused on achieving its objectives, dismissing claims that could undermine its credibility.
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