Dangote Refinery to Sell Stake to Repay Loans
The Dangote Refinery has announced plans to sell a 12.7% stake in 2024 to service its loans, according to a report by Fitch Ratings, a credit rating agency.
Background on the Refinery
The Dangote Refinery is a massive oil refining project located in Lagos, Nigeria. It is owned by the Dangote Group, a leading African conglomerate. The refinery has a capacity to process 650,000 barrels of crude oil per day.
NNPC’s Initial Investment
In 2021, the Nigerian National Petroleum Company Limited (NNPC) acquired a 7.25% stake in the refinery for $1.0 billion. This investment was part of a larger agreement between NNPC and the Dangote Group.
Option to Acquire Additional Stake
As part of the agreement, NNPC had the option to purchase an additional 12.75% stake in the refinery by June 2024. However, NNPC has decided not to exercise this option.
Impact on Loan Servicing
The decision by NNPC not to invest further in the refinery may impact the refinery’s ability to service its loans. Fitch Ratings has expressed uncertainty about the timely divestment of the stake and the repayment of the loan maturing in August 2024.
Dangote’s Confirmation
In July, Alhaji Aliko Dangote, President of the Dangote Group, confirmed that NNPC has only a 7.2% stake in the refinery, contrary to earlier reports that suggested a 20% stake.
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NNPC’s Statement
NNPC has confirmed that it decided not to invest further in the refinery. According to a statement by its spokesperson, Olufemi Soneye, NNPC periodically assesses its investment portfolio to ensure alignment with the company’s strategic goals.
Call for Independent Audit
Former Minister of Education Oby Ezekwesili has called for an independent audit to understand why NNPC capped its investment at 7.2% instead of the planned 20%. Ezekwesili has questioned the use of a $3.3 billion loan from Afriexim-Bank to fund NNPC’s stake in the refinery.
Uncertainty Surrounding the Deal
The decision by NNPC not to invest further in the refinery has raised questions about the viability of the project. There are concerns about the refinery’s ability to service its loans and meet its production targets.
Implications for Nigeria’s Oil Industry
The developments surrounding the Dangote Refinery have implications for Nigeria’s oil industry. The refinery was expected to reduce Nigeria’s dependence on imported fuel and boost the country’s economy. However, the uncertainty surrounding the project may impact its ability to achieve these goals.
