The Dangote Group, owners of the Dangote Refinery, has refuted claims by the Nigerian National Petroleum Company Limited (NNPCL) that it extended a $1 billion loan to the refinery during liquidity challenges.
In a statement on Tuesday, the Dangote Group spokesperson, Anthony Chijiena, described NNPCL’s claim as “misinformation,” insisting the state-owned oil company’s $1 billion contribution was an equity investment, not a loan.
Earlier, NNPCL spokesperson Olufemi Soneye had asserted that the company secured a $1 billion crude-backed loan to support Dangote Refinery.
However, Chijiena clarified that the said amount represents only five percent of the total investment in the 650,000 barrels-per-day refinery and was part of an equity deal between both parties.
Chijiena explained that NNPCL had initially proposed a 20 percent stake in the refinery, valued at $2.76 billion.
The arrangement allowed NNPCL to pay $1 billion upfront, with the balance to be recovered over five years through crude oil supply and dividends.
“Our decision to partner with NNPCL recognized their strategic position in the industry as the largest offtaker of Nigerian crude and, at the time, the sole supplier of gasoline into Nigeria.
However, it is inaccurate to claim this investment was necessitated by liquidity challenges on our part,” he said.
He added that as of 2021, when the agreement was signed, the refinery was at the pre-commissioning stage.
He emphasized that the agreement’s structure, which was credit-driven rather than cash-based, further disproves claims of financial struggles on the part of Dangote Refinery.
The Dangote Group revealed that NNPCL was obligated to supply 300,000 barrels of crude daily as part of the agreement but failed to meet this target.
“Given their inability to fulfill this commitment, we gave them a 12-month period to pay cash for the balance of their equity.
“That deadline expired on June 30, 2024, and their equity share was revised down to 7.24 percent,” Chijiena said.
He stressed that NNPCL’s inability to honor the crude supply arrangement was due to overcommitment of its crude cargoes to other financiers amidst unachieved production expectations.
The clarification comes against the backdrop of recent tensions between Dangote Refinery and NNPCL over petrol pricing, with the two entities reportedly at loggerheads since September 2024.
The Dangote Group reiterated that NNPCL’s $1 billion investment is no different from any business transaction in which a partner acquires a stake for mutual benefit.
“It is inaccurate to claim that NNPCL facilitated a $1 billion investment amid liquidity challenges,” the statement read.
The Dangote Refinery, Africa’s largest, continues to attract attention for its role in shaping Nigeria’s petroleum sector amidst reforms and pricing controversies.
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