Dangote Oil Refining Company (DORC) plans to divest a 12.75% stake in its refinery to new investors after the Nigerian National Petroleum Corporation (NNPC) Limited withdrew from fulfilling its obligations for a 20% acquisition of the refinery.
This is contained in a Fitch Rating report on Dangote Industries Limited (DIL), Nigeria’s biggest Indigenous conglomerate.
The report which focuses on liquidity concerns and debt restructuring of the company confirmed that NNPC’s reduction of the acquisition of the refinery from 20% to 7.2% means the company will offer the remaining 12.75% to new investors.
Fitch noted that the group tends to service its significant syndicated loan maturing in August 2024 from the equity divestment.
“In 2021, Nigerian National Petroleum Corporation (NNPC) acquired a 7.25% stake in DORC’s (Dangote Oil Refining Company) project entity for USD1.0 billion, with an option to purchase the remaining 12.75% stake by June 2024.
“Since the option has not been exercised, the group plans to divest a 12.75% stake in DORC in 2024. The group intends to service its significant syndicated loan maturing in August 2024 from the equity divestment. However, timely divestment and meeting the imminent maturity is highly uncertain in our view,” Fitch said.
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Nairametrics had earlier reported that the Chief Executive Officer (CEO) of Dangote Refinery, Aliko Dangote, said that the Nigerian National Petroleum Corporation (NNPC) Limited no longer owns a 20% stake in Dangote Refinery.
The business mogul revealed that the Nigerian oil company now owns only 7.2% of the refinery due to the NNPC’s failure to pay the balance of their share, which was due last month in June.
He stated that while the NNPC had promised to provide the funds, it has been unable to meet its obligations, thus reducing its stake in the refinery to 7.2%.
“The agreement was actually 20% which we had with NNPC and they did not pay the balance of the money up till last year 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%. So NNPC, the government (sic) owns only 7.2%, not 20%.” Dangote stated.
Following Dangote’s announcement, the spokesperson of NNPC, Olufemi Soneye, also released a statement confirming that NNPC decided to cap its stake at 7.2% as it now focuses on other investment opportunities.
What you should know
The Dangote Refinery is a massive oil project located in the Lekki Free Zone, Lagos, Nigeria, boasting a capacity of 650,000 barrels per day (BPD).
Owned by the Dangote Group, it aims to become Africa’s largest oil refinery and the world’s biggest single-train facility.
The refinery is expected to generate 9,500 direct jobs and an additional 25,000 indirect jobs, providing a substantial economic boost to the region.
Once fully operational, the refinery will produce approximately 50 million litres of petrol and 15 million litres of diesel daily, equating to 10.4 million tonnes of petroleum products annually.
