Why Dangote opted to sell the 650,000-capacity refinery to NNPC

• Aliko Dangote, the President of Dangote Industries Limited, has asked the Nigerian National Petroleum Company Limited to buy him out of his refinery
• Dangote made the offer amid a row with the NMDPRA over the level of sulphur in petroleum products from the refinery
• Dangote has promised that the refinery will end petrol import and save Nigeria's hard-earned foreign exchange

Legit.ng’s Pascal Oparada has reported on tech, energy, stocks, investment and the economy for over a decade.

Aliko Dangote has said he is ready to relinquish ownership of the world’s biggest refinery to the Nigeria National Petroleum Company Limited (NNPC).

The Nigerian billionaire spoke amid a new dispute over the sulphur content of petroleum products produced from the refinery and a reported misunderstanding with NNPC, one of the refinery's key equity partners, and the Nigeria Midstream Downstream Regulatory Authority (NMDPRA).

Chairman of the Dangote Group, Aliko Dangote, offers to give up ownership of refinery Credit: Bloomberg/Contributor
Source: Getty Images

Dangote invites NNPC to acquire his refinery

The refinery, which was commissioned by former President Mummadu Buhari, is estimated to have cost about $20 billion. It promises to help end Nigeria’s dependence on petrol imports and save about 30% of the total FX spent on imports.

The Chairman of the Dangote Group asked the NNPC to buy him out and run the refinery the best way they could, stating that they had labelled him a monopolist.

Africa’s richest man said Nigeria has faced a fuel crisis since the 1970s, promising that his refinery can help resolve the problem. He also stated that it appears that some people are uncomfortable with it.

Premium Times reports that Dangote’s bet on oil and gas is becoming hectic in its early days.

The refinery is set to begin selling petrol to the Nigerian market in early August after operating above half its capacity since January 2024, when it began refining petroleum products.

Dangote resorts to importing petrol

Dangote lamented the difficulty of sourcing crude oil, stating that international oil companies (IOCs) are demanding outrageous premiums and sometimes claim the product is unavailable.

According to reports, the NNPC had delivered only 6.9 million barrels of crude oil to the refinery as of May 2023.

The NNPC has a deal with the company that dates back to the beginning of operations. Earlier, the company agreed to a 20% equity participation. 

The Dangote refinery has revealed that NNPC has only paid 7.2% before the deadline issued to the national oil firm.

Dangote speaks on the Future of his proposed steel company

Legit.ng earlier reported that Aliko Dangote, president of the Dangote Group, has said the group will no longer invest in Nigeria’s steel industry to avoid the monopoly label.

The Nigerian billionaire disclosed this on Saturday, July 20, 2024, stating that the allegations of trying to monopolize businesses in Nigeria have become a significant discouragement.

On Thursday, July 18, 2024, the chief executive of Nigeria Midstream Downstream Petroleum Regulatory Authority (NMDPRA), Farouk Ahmed, said that the Nigerian government will not end the importation of petroleum products, saying that it cannot rely on the Dangote Refinery to feed the country.

Source: Legit.ng