Battle Over $1 Billion Loan Between Dangote Refinery and NNPCL: Dangote Group Clarifies Misrepresentation

The Dangote Group and the Nigerian National Petroleum Company Limited (NNPCL) are embroiled in a fresh dispute over a $1 billion crude oil-backed loan. Dangote Refinery, a 650,000 barrels-per-day facility, has denied claims by the NNPCL that the state-owned oil firm facilitated the loan during a liquidity crisis.

In a statement issued on Sunday, Anthony Chijiena, the Dangote Group spokesperson, described NNPCL's claims as misinformation. He clarified that the $1 billion loan is part of an equity investment agreement and not a financial rescue package.

The Disputed Loan

According to Chijiena, the $1 billion represents a 7.24% equity stake in the refinery. Initially, NNPCL had agreed to acquire a 20% stake valued at $2.76 billion. However, only $1 billion was paid upfront, with the balance structured to be recovered through crude supply and dividends over five years.

"If we were struggling with liquidity challenges, we wouldn't have given such generous payment terms. This agreement was credit-driven, not cash-based, indicating our financial stability,ÔÇØ Chijiena said.

Failed Crude Supply Agreement

The Dangote Group further explained that the NNPCL failed to meet a critical component of the agreement - the supply of 300,000 barrels of crude daily. The failure stemmed from the NNPCL's pre-commitments of its crude cargoes to other financiers, compounded by underwhelming production levels.

"Given their inability to supply the agreed volume, we extended a 12-month grace period for NNPCL to pay cash for the remaining equity. This deadline expired on June 30, 2024, prompting a revision of their equity stake to 7.24%,ÔÇØ Chijiena revealed.

A Misrepresentation of Facts

Chijiena stressed that NNPCL's $1 billion investment was a mutually beneficial business decision, not a bailout. "Like any other investor, NNPCL acquired a stake in the refinery. It is misleading to frame this as a $1 billion loan to address liquidity issues,ÔÇØ he said.

Recurring Disputes

This is not the first clash between the Dangote Group and NNPCL. In September 2024, both parties were locked in a heated disagreement over petrol pricing mechanisms, further underscoring the complex dynamics of their partnership.

As tensions persist, industry stakeholders are closely monitoring how this dispute might impact Nigeria's oil and gas sector, particularly as the Dangote Refinery is seen as a critical asset in reducing fuel importation and enhancing local refining capacity.

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