Dangote Refinery plans 12.7% divestment amid loan concerns – Report

• Published On: 07 August 2024 at 18:40

In order to meet loan servicing requirements, Dangote Refinery intends to sell a 12.7% share in the company.

This was highlighted in a report released on Monday by credit rating agency Fitch Ratings.

According to Fitch, the Nigerian National Petroleum Company Limited originally planned to buy a 20% stake in the refinery.

However, the rating agency stated that the national oil firm's choice not to exercise its option to buy an additional 12.75 percent by June 2024 may have an impact on the group's loan servicing capability.

In 2021, the NNPC bought a 7.25 percent ownership in the refinery for $1.0 billion, with the option to buy the remaining 12.75 percent stake by June 2024.

However, NNPCL has now reversed this judgment.

"Since the option was not exercised, the group intends to sell a 12.75 percent stake in DORC in 2024.

"The group aims to use the equity divestment to service a substantial syndicated loan that will mature in August 2024. However, Fitch believes that timely disposal and fulfilling the impending maturity date are highly doubtful.

Alhaji Aliko Dangote, President of the Dangote Group, revealed in July that the NNPC has a 7.2% stake in the facility.

Contrary to popular assumption, the NNPC holds a 20% stake in the refinery.

"The arrangement was actually 20% with NNPC, and they did not pay the balance of the money until last year; then we offered them another extension until June (2024), and they said they would stay at the rate they had previously paid, which is 7.2%. So NNPC owns only 7.2 percent, not 20 percent," Dangote stated.

NNPC confirmed this, noting that it had decided against additional investment in the refinery.

"NNPC Limited periodically analyzes its investment portfolio to ensure that it is in line with the company's strategic aims.

"The decision to cap its equity participation at the paid-up sum was made and communicated to Dangote Refinery several months ago," NNPC spokesperson Olufemi Soneye stated.

Meanwhile, Oby Ezekwesili, a former Minister of Education, has called for an independent audit to look into why Nigerian National Petroleum Company Limited limited its participation in the Dangote Petroleum Refinery to 7.2% rather than the originally planned 20%.

"Did the Nigerian government not tell us it borrowed $3.3bn from Afriexim-Bank to take a stake in the Dangote refinery?" Ezekwesili questioned President Bola Tinubu, pushing him to quickly commission an independent audit of the Dangote refinery-NNPC deal so that the public can have a comprehensive picture of the situation.