“You Lied” Dangote Refinery refutes NNPC’s Claim of liquidity challenges

….‘NNPC was unable to supply agreed 300,000 Bpd Of Crude

Dangote Petroleum Refinery has denied experiencing liquidity challenges when the Nigerian National Petroleum Company (NNPC) Limited invested $1 billion to support the plant’s construction.

On December 16, the NNPC claimed that its $1 billion crude-backed loan was instrumental in supporting the refinery during liquidity challenges.

But in a statement on Wednesday, Anthony Chiejina, group chief branding and communications officer of the Dangote Group, said the NNPC’s stance was a distortion of the facts.

“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.

He said the refinery’s decision to enter into a partnership with the NNPC was based on the recognition of “their strategic position in the industry as the largest offtaker of Nigerian crude” and at the time, the sole supplier of petrol into 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.”

Chiejina said the agreement would have been cash-based rather than credit-driven if the refinery struggled with liquidity issues.

‘NNPC WAS UNABLE TO SUPPLY AGREED 300,000 BPD OF CRUDE’

He also said the NNPC was subsequently unable to supply the agreed 300,000 barrels a day of crude (bpd).

According to the spokesperson, 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.”

Therefore, Chiejina said it is “inaccurate” to claim that the national oil firm facilitated a $1 billion investment amid liquidity challenges.

Like all business partners, he said, the NNPC invested $1 billion in the refinery to acquire a 7.24 percent shareholding stake “which is beneficial to its interests”.

Chiejina added that the NNPC remains the refinery’s valued partner in progress, emphasising the need for all stakeholders to adhere to the facts and present the narrative in the correct context, for accurate reporting by media for stakeholders’ benefit.