NNPCL’s reduction in refinery stake huge mistake, says Dangote

Aliko Dangote, President of Dangote Group and owner of the 650,000 bpd Lagos refinery, has criticised the Nigerian National Petroleum Company Limited (NNPCL) for reducing its stake in his refinery from 20% to 7.2%.

During an interview with Bloomberg Television, Dangote stressed that the NNPC’s decision was a mistake, explaining the favourable deal that was originally offered to the company.

“We gave them (NNPC) a good deal. We said, okay, fine, we structured an agreement. The first agreement was that they were going to pay us a billion dollars. The deal was about $2.79 billion. And then the balance of the money, $1 billion, which they paid us over a year and a half ago, and then the balance of the money was split into two.

“One position was that every crude they supply to us, 300,000 barrels per day, we’ll deduct $2 and then up to the time they finish paying that, one third. The other one third will come out of their own profit. So, why NNPC opted out is a little bit confusing.

“They wanted this agreement to be changed where they wanted to pay cash, not in any other way. So, we said, okay, fine. We signed another agreement, you know, cancelling the other one. The new agreement that we signed was for them to pay us after one year, no interest, after one year, they’ll pay us the balance of $1.8 billion.

“The month for them to pay was June. And by June they came back to us and said, no, they’ve changed their minds and they want to remain at 7.2 per cent. So, okay, fine. So, we left it and we now own the rest of the shares, they own 7.2 per cent. And that’s what it is. But I think they made a big mistake.

“But no, there’s no negotiation. The agreement is finished, dead, completed. It’s 7.2 per cent,” he stated.

Despite the reduction in the NNPC’s stake, Dangote revealed that his refinery would still receive 390,000 barrels per day of crude from the NNPC in October.

He noted that selling crude and fuel in naira would reduce pressure on the Nigerian currency by 40%.

On the upstream sector, Dangote disclosed ownership of two oil blocks set for production next month but added that he would not heavily invest in that segment.

Dangote also addressed fuel prices, stating that his refinery’s product is 15-20% cheaper than imported gasoline. He expressed confidence that the refinery’s output would stabilise the naira and provide clarity on Nigeria’s actual fuel consumption.

Additionally, Dangote reflected on his earlier ambitions to purchase Arsenal Football Club, admitting that the timing and financial commitment required for the $20 billion refinery project made the acquisition impossible.