NNPC Limited quietly cedes 12.8% stake in Dangote Refinery

Sopuruchi Onwuka

Government has silently accepted to whittle down the country’s 20 percent financial stake in the hyped Dangote Refinery, digging up more questions over the controversial deal which was sold to Nigerians as low hanging fruit for cheaper and more available transportation fuels in the local market.

 Both the Chairman of Dangote  Group, Aliko Dangote, and the group spokesman of the NNPC Limited, Olufemi Soneye, confirmed to journalists  on Sunday that public interest in the offshore refinery located in one of the free trade zones in Lagos State is now mere 7.2 percent.

 

“We made a commercial decision to cap our investment at the amount already paid,” Soneye stated in official position of NNPC Limited on the investment.

Dangote had told visiting journalists that public interest acquired by the national oil company in his refinery has been downgraded due to inability of NNPC Limited to match up cash calls for the equity.

 “NNPC no longer owns 20 percent stake in the Dangote refinery. They were met to pay their balance in June, but have yet to fulfil the obligations. Now, they only own a 7.2% stake in the refinery,” Dangote clarified.

The startling revelation points to many inconsistencies in the investment agenda of the national oil company which had declared that it was pursuing massive investment partnerships in the renewed local refining industry in order to revive the midstream petroleum value chain.

The Group Chief Executive Officer of NNPC Limited, Mallam Mele Kyari, had told The Oracle Today that he was driving a plan that would see the national oil company take 20 percent equity stake in all local refineries of 50,000 barrels per day processing stream capacity.

Kyari pointed at some local refining companies including Waltersmith, Aradel and others that have expressed expansion ambitions, saying the partnerships with the companies was meant to ensure protection of prime national interests in the local fuel market.

Analysts have however seen the NNPC’s acquisition of equity in Dangote Refinery as more of a rescue intervention than commercial investment following the funding difficulties that bogged down the refinery and prolonged the project delivery.

The refinery which is now in operation had encountered cost escalation and project delays at a time of closing global funding windows for fossil energy development, making foreign loans difficult.

The NNPC had stepped in with acquisition of 20 percent interest in Dangote refinery for $2.76 billion for its one of its business units: the NNPC Greenfield holds the investment.

The deal was sold to the public as strategic investment that would yield commodity equity to help displace imports, cut associated costs and reduce retail prices of petroleum products in the petroleum markets.

Mallam Kyari told our correspondent in Abuja that the company’s investment agenda in local refineries was designed to ultimately phase out importation through multiplicity of equity products that would be delivered to the domestic market.  The national oil company is yet to announce any other equity investment in local refineries.

Again, the Dangote refinery which commenced production early in the year is yet to impact positively on the local fuel market where price jumps and scarcity still engage the NNPC Limited.

The NNPC Limited stated last week that import discharge glitches associated with heavy rain stalled fuel distribution in the local market and caused scarcity in major demand centers. The statement infers strongly that the country is still reliant on imported petrol despite the 650,000 barrels per day Dangote Refinery.

But the national oil company explained its cap on investments in Dangote Refinery on commercial decision, saying “this decision was taken by NNPC Ltd and has no impact on our business.”