In a surprising turn of events, the Nigerian National Petroleum Company Limited (NNPCL) has announced a significant reduction in its stake in the Dangote Refinery from 20% to 7.2%.
In this article, TRIBUNE ONLINE explained the reasons for this development and its impacts on businesses in Nigeria.
BACKDROP
Africa’s richest man Aliko Dangote had said the Nigerian National Petroleum Company Limited (NNPCL) owns a 7.2% stake in the Dangote Petroleum Refinery, and not a 20% stake as initially announced before the inauguration of the facility at the Lekki Free Trade Zone.
Dangote, who made this known at a press briefing on Sunday, July 14, said NNPC’s stake dropped to 7.2% over the company’s failure to pay the balance of their share, which was due in June. The NNPC had acquired a 20 per cent interest in the $20bn Dangote refinery for $2.76 billion.
NNPCL’S RESPONSE
Olufemi Soneye, Chief Corporate Communications Officer of NNPCL, confirmed the development, stating that the company periodically reviews its investment portfolio and makes a commercial decision to cap its investment at the paid-up sum.
INITIAL INVESTMENT
In September 2021, NNPCL acquired a 20% interest in the Dangote Refinery for $2.76 billion, with a balance of $1.76 billion payable upon project completion or a mutually agreed date.
IMPACT ON BUSINESS
Soneye reassured that the decision does not impact NNPCL’s business operations. The Dangote Refinery, which commenced production on January 12, marks a significant milestone in Nigeria’s energy landscape.
EXPERTS REACT
Some experts who spoke to Channels Tv said though the private refinery won’t solve Nigeria’s energy security needs, its operations would go a long way in making premium petrol products available in the country.
According to them, the input cost for the operationalisation of the $20bn facility is import-dependent, adding that the volatility of the foreign exchange rates might make it difficult for any marginal reduction in the prices of the premium commodities.
These were the thoughts of the Publisher of Sweet Crude Reports, Hector Igbikiowubo; and Nairametrics Founder, Ugodre Obi-Chukwu; on Inside Sources with Laolu Akande, a socio-political programme aired on Channels Television recently.
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