NNPCL Now Owns 7.2%, No Longer 20% of Dangote Refinery – Aliko Dangote

In a recent media parley, Aliko Dangote, the Chief Executive Officer of Dangote Refinery, announced a significant shift in the ownership and operational strategies of the $19 billion refinery. He revealed that the Nigerian National Petroleum Corporation (NNPC) Limited no longer holds a 20% stake in the refinery.

Dangote disclosed that due to NNPC’s failure to fulfill its financial obligations, its stake in the refinery has been reduced from the initially agreed 20% to a mere 7.2%.

“The agreement was actually 20% which we had with NNPC and they did not pay the balance of the money up till last year. We gave them another extension up till June 2024, but they declined to proceed beyond the 7.2% stake,” Dangote explained.

This statement came as a surprise to many Nigerians, who had been led to believe by the government that it maintained a 20% stake in the refinery.

The Nigerian state oil company’s Group Managing Director, Mele Kyari, had previously justified the stake acquisition by disclosing the profit potential of the refinery business and its strategic importance for Nigeria’s energy security.

Earlier this year, reports indicated that NNPC had planned to raise $2.76 billion to finance its 20% stake in the refinery. According to the 2022 audited financial statements of NNPC Ltd, the company had acquired this stake through a $1.036 billion funding arrangement from Lekki Refinery Funding Limited, with $1 billion paid directly to Dangote Refinery and $36 million allocated for transaction costs.

The state-owned company pledged 35,000 barrels of crude oil per day (bpd) as repayment for the loan.

However, Dangote revealed that NNPC only managed to secure a 7.2% stake, failing to meet the financial obligations required for the full 20% share. This shortfall has significantly impacted the refinery’s operations, particularly its crude oil supply chain.

Located in the Lekki Free Zone, Lagos, the Dangote Refinery is noted as Africa’s largest oil refinery and the world’s biggest single-train facility. With a capacity of 650,000 barrels per day (bpd), the refinery aims to significantly boost Nigeria’s refining capabilities and reduce its dependency on imported petroleum products.

Besides the supply of petroleum products, the refinery is expected to generate 9,500 direct jobs and an additional 25,000 indirect jobs, providing a substantial economic boost to the region.

Once fully operational, it will produce approximately 50 million liters of petrol and 15 million liters of diesel daily, amounting to 10.4 million tons of petroleum products annually. Additionally, it will yield 4.6 million tons of diesel and 4 million tons of jet fuel per year.

However, one of the critical challenges faced by Dangote Refinery has been securing a consistent supply of crude oil. Dangote confirmed that due to NNPC’s inability to provide the promised crude, the refinery has had to source crude oil from international markets, including the United States and Brazil.

The 20% NNPC’s stake in the refinery was expected to secure the nation a place in the massive oil project, to ensure energy security and economic stability. However, the failure to meet these commitments has led to a reduction in NNPC’s stake, forcing Dangote Refinery to look abroad for crude supplies, further delaying the refinery’s operational timeline.

Despite these setbacks, Dangote remains optimistic about the refinery’s future. He announced that the refinery is set to begin fuel production by August 2024, having resolved its crude oil supply issues with the help of NNPC and the federal government.