Aliko Dangote, has publicly expressed his frustration over the Nigerian National Petroleum Company’s (NNPCL) unexpected decision to significantly reduce its stake in the Dangote Petroleum Refinery from 20% to 7.2%.
This development comes after NNPC acquired a 20% interest in the refinery for a substantial $2.76 billion in September 2021. However, in a surprising turn of events, Dangote confirmed on July 14, 2024, that the national oil company had opted to decrease its investment.
During an interview with Bloomberg TV, Dangote described the decision as “confusing,” highlighting that NNPCL had been offered a highly favourable deal. He elaborated on the initial agreement, which included an initial payment of $1 billion, with the balance split into two portions.
According to Dangote, the first portion involved deducting $2 from every crude barrel supplied to the refinery, totaling 300,000 barrels per day, until the payment was settled. The remaining balance was divided into two, with one-third payable by NNPCL and the other third deducted from their profits.
Dangote revealed that NNPCL subsequently sought to restructure the agreement, opting to pay cash for the stake instead. A new agreement was signed, but NNPCL later changed its stance and decided to maintain a 7.2% stake.
Dangote emphatically stated that there are no ongoing negotiations, and the agreement is “finished, dead, and completed.” He also highlighted the competitive pricing of the premium motor spirit (PMS), also known as petrol, sold by the Dangote refinery to NNPC, which was 15% cheaper than imported products.
Following NNPCL’s commencement of petrol lifting at the refinery, Dangote clarified that the reported price of N898 per litre was misleading. He explained that NNPC’s announced price likely included profits, whereas the actual price was lower.
Moreover, Dangote emphasised that the Dangote refinery’s petrol was cheaper than NNPC’s imported products, with a price difference of 15 to 20%. This significant price disparity under-scores the potential of the refinery to provide cost-effective fuel solutions for the Nigerian market.
Dangote’s remarks provides valuable insight into the complex dynamics surrounding the Dangote Petroleum Refinery and NNPCL’s investment decisions. As Africa’s largest refinery, the Dangote Petroleum Refinery is poised to play a pivotal role in meeting Nigeria’s fuel demands and promoting economic growth.
