Why NNPC Reduced Stake in Dangote Refinery

NNPC explains the reasons behind reducing its stake in the Dangote refinery. Find out the strategic and economic factors involved.

The decision by the Nigerian National Petroleum Company (NNPC) Limited to decrease its equity participation in the Dangote Petroleum Refinery has been clarified, with the company stating that this move was part of a pre-planned strategy that had been in the works for several months.

NNPC’s spokesperson, Femi Soneye, highlighted that the company regularly reviews its investment portfolio to ensure that it is in line with its strategic objectives and goals.

Aliko Dangote, Africa’s wealthiest individual, recently disclosed that NNPC’s ownership stake in his refinery had dropped from 20 percent to 7.2 percent due to NNPC’s failure to fulfill their share payment obligation by the specified deadline in June.

In response to this, Soneye explained that Dangote Refinery had been duly informed well in advance of NNPC’s decision to limit its equity participation to the amount that had already been paid up. This decision had been communicated to Dangote Refinery several months prior.

NNPC had acquired a 20 percent interest in Dangote Refinery for $2.76 billion in September 2021, with NNPC Greenfield holding this investment as per the company’s 2022 audited financial statements.

The company further stated that the remaining $1.76 billion of the equity investment cost would be settled either upon the completion of the refinery or at a mutually agreed-upon date.

The commencement of production at the Dangote Refinery on January 12 marked a significant milestone in Nigeria’s petroleum industry, underscoring the importance of this strategic investment.