Africa’s richest man, Aliko Dangote has said only a third of Nigeria National Petroleum Corporation’s (NNPC) $2.7 billion stake in Dangote Refinery will be paid in cash by the state petroleum company. He made this comment in an Arise TV documentary of his new refinery.
What you should know
The NNPC will be taking a 20% stake in the $19 billion Dangote’s Refinery as they have the right to buy stake in any refinery processing more than 50,000 Barrels Per Day (BPD).
Dangote, addressing the criticisms that have trailed the NNPC’s interest in owning a stake in the refinery, stated that critics are wrong.
“People keep talking about the refinery. They (NNPC) didn’t buy only the refinery. They bought refinery with petrochemicals. They are the things people don’t really understand and I want to clarify it.
“The $2.7 billion, they are paying one-third of the money, one-third of the money again will actually be paid through a supply of crude with the deduction of maximum… about $2 some cents and then the one-third of it, which is another $850-$900 million, will be paid from the profit they are going to make from the business.
So, it’s not a cash transaction where they are paying all cash. You can see if we don’t have confidence in what we are doing, we would have asked them to pay all cash.”
The presenter, Abisola Owolawi, brought up rumours regarding Aliko Dangote not being happy with the NNPC purchasing a 20% stake in the refinery stating that he is taking the risk while the NNPC gets to share in the rewards. The billionaire business mogul laid the rumours to rest stating, “They (NNPC) cannot just sit down for energy security, they cannot sit down and see this kind of massive project without them being involved in it.
“But when you look at it again, we are not only cooperating with them you know… because if we are now going to go our separate ways, it will not be good for the industry and I think it is a very very mutually beneficial relationship and we welcome it and it’s not going to take them (NNPC) much time, maybe three or four years to recoup their own investment.”
According to the presenter, the decision of NNPC to buy a stake in the refinery will guarantee a market for Nigerian crude of 300,000 BPD, it will guarantee the refinery a source for oil and perhaps help Nigeria overcome the problems caused by years of mismanagement.
According to Arise oil and gas analyst, Bode Ososami, who also featured in the documentary, “We need large projects that can mop up vast underemployed skills and unemployed people that are there but the local value creation also is a huge multiplier effect on smaller-scale industries which also needs to be encouraged.
“We need more than a few Dangote’s and Dangote has proven the pan-African model and execution ability which can help jump-start the take-off of the downstream sector and as such, I think the project must be encouraged to succeed even if it requires much more support than we would have wanted to give initially.
“Dangote deserves protections given the pioneer status, for all the risk it has taken but this should be done in a way that does not severely erode fairness, business confidence and competitiveness.”