NNPC Pays Initial $1bn For Stake In Dangote Refinery, Secures 20% Ownership

The Nigerian National Petroleum Company Ltd has paid an initial amount of $1bn for its stake in Dangote Oil Refining Company, THE WHISTLER can report.

The payment, which was confirmed by a top official of the NNPC on Sunday in Abuja, effectively secures the NNPC’s 20 per cent ownership of Dangote Refinery.

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The NNPC last year reached a deal with Dangote Oil Refining Ltd valued at $2.76bn to acquire 20 per cent ordinary shares of 200,000 units put of the 1,000,000 total units in Dangote Oil.

Dangote Refinery is a 650,000 barrels per day integrated refinery and petrochemical project under construction in the Lekki Free Zone in Lagos, Nigeria.

It is owned by the Dangote Group and is expected to be Africa’s biggest oil refinery and the world’s biggest single-train facility, upon completion.

The integrated refinery and petrochemical project which will meet 100 per cent of Nigeria’s refined petroleum product requirement and even have a surplus for export when completed is expected to be completed in 2023 after some delays and will generate 9,500 direct and 25,000 indirect jobs.

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It is designed to produce up to 50 million litres of petrol and 15 million litres of diesel a day, roughly 10.4 million tonnes of the product, 4.6 million tonnes of diesel, and 4 million tonnes of jet fuel per year, in addition to having a fertiliser plant, which will utilise the refinery by-products as raw materials.

There had been reports (Not THE WHISTLER) that the NNPC had not paid for its stake in the company.

But speaking on the development, the top official said the sum of $1bn had been paid, adding that the payment of the balance is subject to the start up of the plant and tied to crude oil supply by the NNPC to the Company.

The official described the deal as an ingenious one as it will lock the market for the country’s crude oil.

THE WHISTLER was also informed  that the deal will put no pressure on the finances of the NNPC as the National Oil Company will be required to pay only $2 on every barrel supplied to Dangote Refinery.

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The official said, “We have made the payments. We paid $1bn, the balance is subject to plant start up and tied to crude supply. It was a very ingenious deal. It locks market for our crude and puts no stress on payment as we will pay only $2 on every barrel supplied.”

The Group Managing Director of NNPC Ltd, Mr. Mele Kyari had recently said that the decision to invest in Dangote Oil Refining Company will guarantee energy security for the country.

Kyari had while speaking during an interview on ‘Good Morning Nigeria’ show on the Nigeria Television Authority monitored by THE WHISTLER said that the Corporation will be taking over at least 20 percent equity stake in Dangote Refinery, adding that the funding for the acquisition would be coming through borrowing and not from the Federal Government.

Kyari said that the loan to be borrowed to finance the acquisition of the 20 per cent stake in Dangote Refinery would be repaid on the back of the cashflow to be generated from the investment.

Then, the NNPC GMD had explained that with the Dangote Refinery projected to deliver about 50 million liters of petrol to the country, coupled with the take-off of the Port Harcourt, Wari and Kaduna Refineries’ project, Nigeria would become a hub of petroleum products in the continent.

He had said, “This Refinery will deliver at least 50 million liters of PMS into the Nigerian market and there is no country anywhere that will sit and watch such enormous investments that is related to energy security anywhere in the world to look by the side. No one does this.

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“We as a National Oil Company has the responsibility to ensure energy security for this country and the meaning of this is that you must secure the supply sources. And we have been trying to fix our refineries, we have awarded the contract for the fixing of the Port Harcourt Refineries well ahead of planned schedule.

“The Warri and Kaduna Refinery, we will issue the APC very soon and hopefully before the end of July. That will come parallel and we will deliver all of them around the same time. So the net effect is that you are going to have a petroleum product supply hub for West Africa.

“That means with the NNPC Refineries in place and Dangote Refineries operating and with other initiatives that we are making, we are going to have a massive hub of petroleum production in West Africa.

“This will change the flow of product supply in the whole globe.”

Kyari had explained further that Nigeria will get value from the investments, stating that the NNPC is currently expanding its portfolios to give value for Nigeria in various sectors of the economy such as fertilizer and methanol.

The NNPC GMD added, “This investment is really a good deal for us because it will increase our portfolio and boost the size of our balance sheet.

“We are following international approved processes. No bank is going to give you a kobo if you don’t follow these processes. We are not taking government money to buy this equity. We are going to borrow on the back of the cashflow that will come from the Refinery, on the back of our transactions, equity and dividend that will come from this business. So, we are taking advantage of a business opportunity,

 “When we get this Refinery working and with our 20 per cent stake, you will have a seat on the board of this company. You will have massive influence around the decision that would be made. Therefore, literally, we can say we have control of about 20 per cent of the products that will be coming out from this facility.”

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