NNPC Reduced Stake in Dangote Refinery to Invest in CNG, Says Official

An official has revealed that the NNPC reduced its stake in the Dangote refinery to redirect funds towards investments in Compressed Natural Gas (CNG). This strategic move aims to support the expansion of CNG infrastructure and enhance energy diversification.

Olufemi Soneye, spokesperson for the Nigerian National Petroleum Company Limited, has revealed that the government-controlled energy company decreased its investment in Dangote refinery to focus on Compressed Natural Gas.

According to Soneye, the NNPC limited its investment share to 7.2 percent instead of the intended 20 percent for constructing CNG stations throughout the country.

On Monday, our correspondent observed a video of him making the statement whilst appearing on Berekete Family Radio.

Soneye was summoned to address accusations of collusion between the NNPC and the Nigerian Midstream and Downstream Regulatory Commission aimed at impeding progress on the Dangote refinery.

He refuted the accusations that NNPC, holding a 7.2 percent stake in a company, would intentionally harm it.

During the period of energy transition, he stated that the NNPC had recognized CNG as a more cost-effective alternative to energy for Nigerians.

Compared to petrol, he mentioned that Nigerians could use N10,000 worth of CNG as fuel for their vehicles.

“Our decision to decrease our ownership in Dangote refinery stemmed from a desire to allocate funds towards investing in CNG. As we noted the increased usage of clean and cost-effective alternative energy sources across different countries, we concluded that CNG presented itself as an affordable option.”

The NNPC official explained that they are constructing various CNG stations throughout the country because with only N10,000, Nigerians can have enough fuel for their vehicles to last two weeks. Recognizing the affordability of gas in Nigeria, it makes sense for them to invest in this resource.

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Soneye stated that regarding the accusation of sabotage, “It is important for all Nigerians to understand that there are no problems between NNPCL and Dangote Refinery. We are one of the stakeholders in this refinery, therefore it is not our desire to see its downfall.”

“Why would we want to sabotage a company in which we have invested billions of naira and currently hold a 7.2% stake?”

He asserted that Farouk Ahmed, the Chief Executive of the Nigerian Midstream and Downstream Petroleum Regulatory Authority, spoke in his role as a regulator overseeing all midstream and downstream operators including NNPC.

According to Soneye, Mr Farouk Ahmed holds the top position in Nigeria’s regulatory bodies for both mainstream and downstream petroleum. With control over all refineries and responsibility for petrol distribution, they even outrank NNPC in this sector. As a result, there is no interaction between them and other entities.

The NNPC obtained a 7.25% ownership interest in the refinery for $1 billion in 2021, along with an opportunity to buy the remaining 12.75% by June 2024; however, it has now gone back on its decision.

In July, Alhaji Aliko Dangote, the President of the Dangote Group revealed that instead of holding a 20% stake in the refinery as previously thought, NNPC only possessed a mere 7.2%.

Dangote revealed that the agreement with NNPC was originally for 20 percent, but they failed to pay the remaining balance until last year. An extension was granted until June 2024, however, NNPC insisted on only paying what had already been deposited which amounted to just 7.2 percent. As a result of this payment shortfall, NNPC now owns only 7.2 percent and not the original agreed upon amount of 20 percent according to Dangote’s statement.

Former Minister of Education, Oby Ezekwesili, urged an autonomous audit to determine why the NNPC limited its investment in the Dangote refinery at 7.2% instead of 20%.

Ezekwesili inquired whether the Nigerian government disclosed its borrowing of $3.3bn from Afrieximbank to acquire a share in the Dangote refinery or not.

President Bola Tinubu was urged to initiate an independent audit of the Dangote refinery-NNPC transaction without delay, in order to disclose a transparent account of events for public knowledge.

Fitch Ratings, a credit rating agency, recently reported that the Dangote refinery intends to sell its remaining NNPC 12.7 per cent stake this year in order to service its loans.