The Nigerian National Petroleum Company Limited (NNPCL) has repaid 60 percent of the $1.036 billion loan it secured in September 2021 to finance its purchase of a 20 percent stake in the Dangote Petroleum Refinery and Petrochemicals Free Zone Enterprise (DPRP FZE).
This is according to the information obtained from the financial report of the NNPC for the fiscal year ending December 31, 2023, under the section “Financing of investment in Dangote Refinery.”
The document stated that by the end of December 2023, the state-owned oil company had paid back $625 million of the loan, leaving a balance of $424 million.
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The loan, arranged through a forward sale agreement with Lekki Refinery Funding Limited, carried an interest rate of 3-month London InterBank Offered Rate (LIBOR) plus 6.125 percent.
The financial statement noted that NNPC agreed to supply 35,000 barrels of crude oil per day as part of the deal to settle the $1.036 billion loan used to finance its investment in the Dangote Refinery.
The document read, “In September 2021, NNPC entered into a forward sale agreement with Lekki Refinery Funding Limited to supply 35,000 barrels of crude oil per day as repayment for the $1.036 billion loan received to fund the investment in Dangote Refinery.
“The interest rate for this facility is 3-month LIBOR plus 6.125 percent. By December 31, 2023, NNPC has repaid $625 million of the principal loan, with $424 million still outstanding.”
Originally, NNPC Greenfield Limited, a wholly-owned subsidiary of NNPC, managed the investment. However, following the restructuring mandated by the Petroleum Industry Act (PIA), management responsibility was shifted to NNPC Downstream Investment Service (NDIS).
This restructuring also altered the payment arrangement. The remaining balance of $1.76 billion for the equity stake was agreed to be paid in cash, replacing the earlier proposal to offer a $2.5 per barrel discount on crude oil prices as compensation.
As of December 2023, NNPC Limited holds a 7.25 percent interest in the DPRP FZE.
NNPC’s 2022 audited financial statement revealed that the company acquired a 20 percent stake in the Dangote refinery for $2.76 billion. Of this, $1 billion was paid directly to Dangote Refinery, while $36 million covered transaction fees. The loan for this acquisition was secured from Lekki Refinery Funding Limited.
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However, in July 2024, Aliko Dangote publicly stated that NNPC no longer retained its 20 percent stake, as the company had failed to meet the deadline for the remaining payment, which was due in June.
NNPC, in response, clarified its position, explaining that the current 7.2 percent equity stake in the $19 billion Dangote Refinery was due to a strategic decision rather than a failure to meet obligations.
According to Femi Soneye, NNPC’s chief corporate communications officer, the decision to reduce its stake was deliberate and had been communicated to Dangote months earlier.
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