Dangote calls NNPC’s exit from refinery deal a mistake

Aliko Dangote, the CEO of Dangote Refinery, has labelled the Nigerian National Petroleum Company (NNPC) Limited’s decision to pull out of its initial plan to acquire a 20 per cent stake in his refinery as “a big mistake”

Speaking in an interview with Bloomberg TV in the United States on Monday, Dangote explained how negotiations with NNPC came to a standstill.

He revealed that the Dangote Group had presented NNPC with highly favourable offers worth approximately $2.79 billion, but the state-run oil company was unable to meet its commitments.

According to him, NNPC opted out of two different arrangements they had initially proposed and ultimately decided to limit its investment to 7.2 per cent.

He said: “We gave them a good deal. We structured an agreement with them. The deal was about $2.79 billion. The first part of the money was $1 billion which they paid us about a year and half ago.

“The balance of the money was split into two. One portion is that for every crude they supplied to us, we would deduct $2 and then up till the time they finish paying that one-third. The other one-third would have come out of their profit.

“Later, NNPC opted out from the first agreement, saying it’s a little bit confusing. They wanted the agreement to be changed.”

Dangote said the NNPC wanted to pay cash, which led to signing another agreement, cancelling the other one. “The new agreement we signed was that for them to pay us after one year.

“After one year, they will pay us the balance of $1.8 billion. The month for them to pay was June. But in June, they came back to us and said they’ve changed their mind.

“They want to remain at 7 percent. We said ok, fine. So we left it. Now, we own the rest of the shares. They own only 7.2 percent. That’s what it is. I think they made a big mistake,” Dangote said.

When asked about the possibility of renegotiating with NNPC, Dangote said that the deal is final and there is no turning back.

“There is no more negotiation with us. That agreement is finished. It’s dead. It’s completed. That’s where we are right now.”

Speaking at his petrochemical plant in Lagos in July, Dangote announced that the NNPC no longer holds a 20 per cent stake in the refinery.

Dangote disclosed to the press that NNPC’s share has reduced to 7.2 per cent, citing the corporation’s failure to settle the outstanding payment for its stake, which was due in June.

“The agreement was actually 20 percent which we had with NNPC and they did not pay the balance of the money up till last year and then we gave them another extension up till June (2024) and they said that they would remain where they have already paid which is 7.2 percent.”