Why NNPC reduced stake in Dangote Refinery – Audited Report

The Nigerian National Petroleum Company Limited (NNPC Ltd) has explained why it reduced its stake in the Dangote Refinery.

The NNPC Ltd, in its 2023 audited financial statement, said in September 2021, it proposed to acquire 20 per cent interest in Dangote Petroleum Refinery and Petrochemicals Free Zone Enterprise (DPRP FZE).

It explained that the interest, worth $2.76 billion, was financed by a forward sale agreement of $1.036 billion from Lekki Refinery Funding Limited of which $1 billion was paid to Dangote Petroleum Refinery and Petrochemicals Free Zone Enterprise (DPRP FZE).

This investment, it said, was initially held by NNPC Greenfield Limited (a special purpose vehicle 100 per cent owned by NNPC) in trust for NNPC Limited.

“Due to restructuring of the NNPC Limited Post PIA era, the function of this unit has been moved to NNPC Downstream Investment Service (NDIS).

“The balance of the cost of equity investments made in DPRP FZE, which is USD1.76 billion has been agreed to be paid in cash instead of the proposed crude discount of $2.5/bbl on the official selling price of crude oil.

“As at 31 December 2023, NNPC Limited holds a 7.25 per cent interest in DPRP FZE,” the NNPC Ltd said in its report.

Apparently, NNPC Ltd was unable to make the cash payment and thus stuck to owning only 7.2 per cent stake in the refinery.

NNPC Ltd. said last month that it now owns a 7.2 per cent stake in the 650,000 barrels per day Dangote refinery.

The oil firm made this known in reaction to a statement by the President of Dangote Group, Aliko Dangote, that NNPC no longer owns a 20 per cent stake in the Dangote refinery.

Speaking at a press briefing at the refinery at the time, Mr Dangote said NNPC Ltd now owns only 7.2 per cent stake in the refinery due to its failure to pay the balance of its share, which was due in June.

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Confirming the development in a statement, the NNPC Ltd said its period assessment of the investment portfolio led to the decline in its share of the refinery.

The 650,000 barrels per day Dangote Petroleum Refinery commenced production of diesel and aviation fuel in January.

The company made a further move towards the commencement of the production of refined petroleum products with the receipt of an additional one million barrels of bonny light crude supplied by NNPC Ltd.

In April, the company commenced supplying petroleum products to the local market.