The Dangote Refinery plans to sell 12.7% stake of its ownership in an effort to address loan servicing obligations.
This was disclosed in a report by Fitch Ratings, a credit rating agency, released on Monday.
The Nigerian National Petroleum Company Limited had originally planned to purchase a 20% share in the refinery, according to Fitch.
However, the rating agency highlighted that the national oil firm’s decision not to exercise its option to acquire an additional 12.75 per cent by June 2024 could affect the group’s loan servicing capability.
Back in 2021, the NNPC purchased a 7.25 per cent stake in the refinery for $1.0 billion, with an option to buy the remaining 12.75 per cent stake by June 2024.
However, NNPCL has since backed out of this decision.
“Since the option has not been exercised, the group plans to divest a 12.75 per cent stake in DORC in 2024.
“The group intends to service its significant syndicated loan maturing in August 2024 from the equity divestment. However, timely divestment and meeting the imminent maturity are highly uncertain in our view,” Fitch stated.
In July, President of the Dangote Group, Alhaji Aliko Dangote, clarified in July that the NNPC actually owns a 7.2% ownership in the facility,
contrary to popular belief that the NNPC owns a 20% share in the refinery.
“The agreement was actually 20 per cent which we had with NNPC, and they did not pay the balance of the money up till last year; 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 per cent. So NNPC owns only 7.2 per cent, not 20 per cent,” Dangote explained.
NNPC corroborated this, stating that it decided against further investment in the refinery.
“NNPC Limited periodically assesses its investment portfolio to ensure alignment with the company’s strategic goals.
“The decision to cap its equity participation at the paid-up sum was made and communicated to Dangote Refinery several months ago,” said NNPC spokesperson Olufemi Soneye.
Meanwhile, a former Minister of Education, Oby Ezekwesili, has called for an independent audit to investigate why the Nigerian National Petroleum Company Limited limited its stake in the Dangote Petroleum Refinery to 7.2 per cent instead of the initially planned 20 per cent.
“Did the Nigerian government not tell us it borrowed $3.3bn from Afriexim-Bank to take a stake in the Dangote refinery?” Ezekwesili questioned, urging President Bola Tinubu to immediately commission an independent audit of the Dangote refinery-NNPC transaction to provide the public with a clear understanding of the situation.
