The Chairman of the Dangote Group, Aliko Dangote, revealed that the Nigerian National Petroleum Corporation Limited made a significant mistake by reducing its stake in the Dangote Refinery.
In a recent interview with Bloomberg, Dangote revealed that the NNPC was originally meant to take a 20% stake in the refinery, but that has now been reduced to 7.2%.
According to Dangote, the NNPC had originally agreed to a deal worth $2.79 billion, which included an upfront payment of $1 billion.
However, after renegotiating the terms, the corporation decided to reduce its equity share.
“They’ve made a big mistake, but that’s where we are now,” Dangote remarked, emphasising that the agreement is now finalised, with Dangote Group holding the majority of the refinery’s shares.
He said, “We agreed with them and we gave them a good deal. Well, we structured an agreement. The first agreement was that they would pay us $1 billion as part of a deal worth about $2.79 billion. They paid that $1 billion roughly a year and a half ago. The balance of the payment was to be split into two portions:
“The first portion is every time they supplied us with crude (around 300,000 barrels), we would deduct $2 from the balance until the debt was paid off.
“The other portion would come out of their profits.
“However, the NNPC opted out of this structure. They got confused, or maybe there was some misunderstanding. They no longer wanted the crude deduction arrangement and preferred to pay the remaining balance in cash.”
Dangote further explained that the company later signed a new agreement to replace the previous one.
He added, “In this new agreement, they agreed to pay us the balance of $1.8 billion, but with no interest, and after one year.
“The due date was in June, but in June, they came back to us and said they had changed their minds. They wanted to stick to their 7.2% stake instead of the original 20%. We accepted that and now we own the rest of the shares. They have 7.2%, and we own the remaining balance.
“I think they made a big mistake, but that’s how things are now. There’s no further negotiation—the agreement is done, and finalised. NNPC holds 7.2%, and that’s where we stand.”
CR: Punch NG
