The Dangote Petroleum Refinery and Petrochemicals (DPRP) has rejected allegations that the Nigerian National Petroleum Company Limited (NNPCL) utilized a $1 billion loan obtained through a crude forward sale agreement to assist the refinery during a liquidity crisis.
In a statement issued on Wednesday, Anthony Chiejina, the company’s Chief Branding and Communications Officer, described the NNPCL’s claim as a misrepresentation of the facts.
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“We would like to clarify that this is a misrepresentation of the situation as $1bn is just about 5% of the investment that went into building the Dangote Refinery,” Chiejina said.
Chiejina explained that the refinery’s decision to partner with the NNPCL was driven by their acknowledgment of the NNPCL’s “strategic position in the industry as the largest offtaker of Nigerian crude” and, at the time, its status as the exclusive supplier of petrol to Nigeria.
“We agreed on the sale of a 20% 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,” Chiejina said.
“If we were struggling with liquidity challenges we wouldn’t have given them such generous payment terms. As at 2021 when the agreement was signed, the refinery was at the pre-commission stage.”
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The statement indicated that if the refinery faced liquidity problems, the agreement would have been structured on a cash basis rather than relying on credit.
According to the refinery’s spokesman, the NNPCL was unable to provide the agreed-upon 300,000 barrels per day of crude.
He stated that the shortfall was because the NNPPC “had committed a greater part of their crude cargoes to financiers with the expectation of higher production which they were unable to achieve”.
“We subsequently gave them a 12-month period for them to pay cash for the balance of their equity given their inability to supply the agreed crude oil volume,” he said.
“NNPCL failed to meet this deadline which expired on June 30th 2024. As a result, their equity share was revised down to 7.24%. These events have been widely reported by both parties,” he said.
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