Aliko Dangote, Chief Executive Officer (CEO) of the Dangote Refinery, has described the Nigerian National Petroleum Company’s (NNPC) decision to withdraw from the initial plan to invest in a 20% stake in his refinery as “a big mistake.”
Dangote made this statement during an interview with Bloomberg TV in the U.S. on Monday, where he narrated how the agreements with NNPC were halted.
He mentioned that the Dangote Group offered NNPC very favorable deals valued at about $2.79 billion, but the national oil company was unable to fulfill its obligations.
According to him, NNPC opted out of two different arrangements they had initially proposed and ultimately decided to limit its investment to 7.2%.
“We gave them a good deal. We structured an agreement with them. The deal was about $2.79 billion. The first part of the money was $1 billion which they paid us about a year and half ago.
“The balance of the money was split into two. One portion is that every crude they supplied to us then, we would deduct $2 and then up till the time they finish paying that one-third. The other one-third would have come out of their own profit.
“Later, NNPC opted out from the first agreement, saying it’s a little bit confusing. They wanted the agreement to be changed.
“They said they wanted to pay cash. So, we said okay, fine. We signed another agreement, cancelling the other one. The new agreement we signed was that for them to pay us after one year.
“After one year, they will pay us the balance of $1.8 billion. The month for them to pay was June. But in June, they came back to us and said they’ve changed their mind.
“They want to remain at 7%. We said ok, fine. So we left it. Now, we own the rest of the shares. They own only 7.2%. That’s what it is. I think they made a big mistake,” Dangote said.
When asked about the possibility of renegotiating with NNPC, Dangote stated that the deal is final and there is no turning back.
“There is no more negotiation with us. That agreement is finished. It’s dead. It’s completed. That’s where we are right now,” Dangote added.
Backstory
Nairametrics had previously reported in July that Aliko Dangote, CEO of Dangote Refinery, announced that the Nigerian National Petroleum Corporation (NNPC) Limited no longer holds a 20% stake in the refinery. Speaking at his petrochemical plant in Lagos,
Dangote disclosed to newsmen that NNPC’s share has reduced to 7.2%, citing the corporation’s failure to settle the outstanding payment for its stake, which was due in June.
“The agreement was actually 20% which we had with NNPC and they did not pay the balance of the money up till last year and then we gave them another extension up till June (2024) and they said that they would remain where they have already paid which is 7.2%. So NNPC, the government (sic) owns only 7.2% not 20%.” Dangote stated.
Nigerian State Oil company Group Managing Director, Mele Kyari stated in 2021 that the decision to own a stake in the refinery was driven by the profit potential of the refinery business and the need to have a say in a business of this magnitude, which borders on energy security for Nigeria and Africa, with huge implications for fiscal security of the country.
