NNPC’s 20% to 7.2% Stake Cut in Dangote Refinery Sparks Controversy

Dangote has criticised NNPC’s reduced stake in the refinery, calling the decision a huge mistake during a recent interview.

Aliko Dangote, Africa’s richest person and the President of the Dangote Group, owners of the new 650,000 barrels per day crude oil refinery in Lagos, on Monday argued that the decision by the Nigerian National Petroleum Company Limited (NNPC) to reduce its stake in the facility from 20 per cent to 7.2 per cent was a huge mistake.

Speaking during a Bloomberg Television interview in New York, monitored by THISDAY, Dangote further disclosed that although he has two oil blocks which are set to begin production in October, he will likely not invest heavily in Nigeria’s upstream sector.

Besides, the billionaire businessman noted that the NNPC has pledged to supply the refinery 390,000 bpd barrels in October, stressing that the expected settlement of transactions in Naira would reduce pressure on the local currency by as much as 40 per cent.

But on the reduction of its interest in the refinery, the NNPC had defended the decision, stressing that it planned to invest more in cleaner energy sources like Compressed Natural Gas (CNG).

Dangote stated that there was no room for further negotiation on the matter, pointing out that although it was a good deal, the NNPC bungled it.

“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 portion 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 own now 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.

Dangote stressed that 90 per cent of the world did not really give the refinery the chance to survive, noting that he felt satisfied personally for the progress made so far.

He explained that the company already had loans of about $2.4 billion while the refinery was still trying to get a suitable location because of the complex issues involved, reiterating that everything was built from the scratch.

On recent calls for him to invest in the upstream segment so as not to be held hostage by oil producers, Dangote stated that although he has two oil blocks that will begin production this October, he doesn’t intend to invest heavily in that segment.


“Well, our upstream, you know, is not big. We have two oil blocks which we have and we are starting production this October,” Dangote added.

Dangote affirmed that it remains the sole decision of the federal government to end a decades-long subsidy on fuel, but noted that in the coming days the government will come up with a robust agreement with the refinery on how to move on with product supply, going forward.

“Subsidy is a very sensitive issue. Once you are subsidising something then people will bloat the price and then government will end up paying what they are not supposed to be paying,” the tycoon said. “Removal of subsidy is totally dependent on the government, not on us,” he stressed.

With the recent directive by President Bola Tinubu to NNPC to sell crude oil in naira and for Dangote refinery to sell petrol in the local currency, Dangote stated that the naira will soon begin to stabilise.

“Petroleum products consume about 40 per cent of our foreign exchange,” Dangote said, adding that fuel from his refinery, which started supplying petrol on September 15 to the state-owned oil company for domestic sale, “can actually stabilise the naira.”

According to him, with the commencement of petrol refining in Nigeria, the real consumption of the product, which he characterised as ‘guesswork’ will soon be unravelled.

“We are going to actually put a tracker on them (trucks) to be sure they are going to take the oil within Nigeria. And that, I think, can help the government save quite a lot of money,” he added.

He stated that negotiations were still on with the government on pricing, expressing confidence in the ability of the minister of finance and the Federal Inland Revenue (FIRS) boss, Zaach Adedeji to thrash out all pending issues.

He noted that from October the NNPC will supply about 12 million barrels, broken down into 390,000 barrels per day.

“Already we have agreed, like, for example, in October, they (NNPC) are going to give us 12 million barrels, which is averagely about 390,000 barrels a day, which we’ll refine. We’ll sell both gasoline, diesel, and aviation fuel, and if there’s any excess, we’ll export,” he observed.

Dangote insisted that the recent price announced by the NNPC that it was getting the product from the refinery was wrong.

“It wasn’t really a disagreement, per se. NNPC bought from us this particular one on the 15th of September at the international price, which they also bought over 800,000 metric tons of gasoline, imported.

“So the one that they bought from us actually is cheaper than the one they are importing. And so when they announced our price, the guy (NNPC spokesman), I don’t know whether he was authorised or not, but it wasn’t really the real price.

“ What they have announced, yes, most likely that is what it cost them, including profit, including whatever, but they have never added profit to their cost. But their own imported one is almost, maybe about 15 per cent to 20 per cent more expensive than ours,” he said.