2 months ago
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- Aliko Dangote has criticized NNPC Limited's decision to reduce its stake in his 650,000 barrels refinery
- NNPC had initially agreed to invest 20%, but reduced it to 7.2%, which Dangote calls a big mistake
- He has also closed the door for any future investment, stressing that the agreement has been concluded
Legit.ng journalist Dave Ibemere has over a decade of business journalism experience with in-depth knowledge of the Nigerian economy, stocks, and general market trends.
Aliko Dangote, Africa’s richest man and President of the Dangote Group, has called the Nigerian National Petroleum Company Limited (NNPC) decision to reduce investment in its crude oil refinery in Lagos a huge mistake.
Source: Getty Images
Speaking during a Bloomberg Television interview in New York Dangote confirmed that NNPCL has scale down its ownership of his refinery from 20% to 7.2%.
The richest man in Africa stressed that NNPC's move is a big mistake.
Dangote explains the situation with NNPC
His words:
"We offered NNPC a good deal. Initially, the agreement was that they would pay us $1 billion upfront on a deal worth $2.79 billion. They paid the $1 billion over a year and a half ago. The remaining amount was divided into two parts: one portion involved deducting $2 from every barrel of crude they supplied to us, up to 300,000 barrels per day, until one-third of the balance was settled. The other one-third would come from their profits."It's unclear why NNPC decided to opt out of this arrangement. They wanted to change the terms, preferring to pay cash instead of continuing with the original method. So, we agreed to a new deal, cancelling the previous one. This new agreement gave them one year to pay the outstanding $1.8 billion without interest. The deadline was June."However, in June, they informed us that they had changed their minds and wanted to keep their stake at 7.2%. We agreed, leaving us with the remaining shares while they retained 7.2%. In my opinion, they made a big mistake."Dangote also stated that there is no more room for renegotiation on the refinery ownership issue.
"The agreement is finished, dead, completed. It’s 7.2%."Dangote Refinery laments low patronage
Earlier, Legit.ng reported that Dangote Refinery raised concerns over the lack of patronage from Nigerian oil marketers due to low pricing strategies on its product sales.
Devakumar Edwin, vice president of Dangote Industries Limited, disclosed this during an X Spaces session organised by Nairametrics.
According to Edwin, the refinery struggles to sell diesel and aviation fuel daily, so it has decided to export its products instead.
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Source: Legit.ng
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