Nigeria needs to stop mortgaging crude – Aliko Dangote

Aliko Dangote, president of Dangote Group has called on the Nigerian government to cease mortgaging the country’s crude oil production.

The company made this known today at the Crude Oil Refinery-Owners Association of Nigeria (CORAN) Summit themed, “Making Nigeria a Net Exporter of Petroleum Products” in Lagos, Nigeria’s commercial capital.

“To ensure sufficient feedstock availability, we will need to stop mortgaging crude,” Aliko Dangote, president of Dangote Group who was represented by Mansur Ahmed, executive director, of Dangote Group said on Tuesday at the refining summit.

Ahmed added “It is unfortunate that while countries like Norway are putting oil proceeds into a future fund, in Africa we are spending oil proceeds from the future. We will also need to prioritise implementation of the domestic crude supply obligation

“We will need to expand our crude oil production capacity to support demand from new refining capacity. The government of President Bola Ahmed Tinubu is taking active steps to achieve this through fast-tracking IOC divestments and other initiatives”.

Read also: Dangote to take 400,000 bpd of Nigerian crude

He noted that the global developments in the petroleum sector particularly in Europe will disrupt historical trade flows for refined petroleum products in Africa.

“Nigeria is uniquely positioned to take advantage of this opportunity and be a formidable player in the global oil industry,” Ahmed said.

He said, “ As a vibrant exporter of refined products, Nigeria will witness an improvement in its balance of trade and generate much-needed foreign currency. Nigeria’s potential as a refining hub is not in doubt, let’s work together to make it happen”.

In August 2023, the NNPC secured a $3 billion oil-backed loan from the African Export-Import Bank (Afreximbank) to support the naira and stabilise the foreign exchange (FX) market.

In the deal, the oil company pledged a total of 164.25 million barrels of crude.

At 90,000 barrels per day, starting from 2024, NNPC is expected to repay the loan through Project Gazelle Funding Ltd, a special purpose vehicle (SPV) incorporated in the Bahamas.

Commenting on the transaction in its 2023 audited financial statements, the NNPC said the funding was utilised to finance an “advance payment of future taxes and royalty obligation due to the federation on production sharing contracts (PSC) assets managed by the company on behalf of the federation”.

According to the NNPC, the interest rate for the facility is 11.8 percent while the margin and liquidity premium are 6 percent and 0.5 percent respectively.

In January, Afreximbank announced the first disbursement of $2.25 billion under the crude oil prepayment facility.