Nigerian government may lose 20% ownership in Dangote Refinery as NNPC fails to supply crude oil

Nigeria now runs the risk of losing a significant part of its equity in the Dangote refinery.

According to a source at the Ministry of Petroleum Resources in Abuja, this is because it failed to meet its obligations under which the equity acquisition was agreed.

Dangote Refinery continues to await NNPC for crude oil supply

Recall that the 650,000 barrels-a-day Dangote refinery was commissioned in May. Ever since the refinery has continued to wait on the supply of crude oil.

Earlier, Legit.ng reported that the NNPCL shunned Dangote Refinery to swap crude oil for loans with several entities.

According to BusinessDaya report, the NNPC must now meet its crude supply obligation, or else, Nigeria loses part of its equity in Africa’s largest refinery.

Nigeria’s equity worth $2.7 billion

Nigeria's government equity in the refinery cost a total of $2.7 billion, equivalent to 20%.

An agreement of cash payment in part and crude oil supply was reached by both parties.

As part of payment for the 20% equity in the refinery, only $1 billion has been paid in cash by the Nigerian government.

The amount paid only guarantees seven percent of the equity in the giant
refinery.

In addition to the $1 billion payment, the NNPC, according to the agreement reached, was supposed to supply crude oil with $1 billion to the refinery once it was completed.

The balance of $700 million was supposed to be paid through earned dividends from the operations of the plant.

BusinessDay, however, reported that in its desperation to sell $1 billion worth of crude oil to the Dangote plant, the NNPC is attempting to extract crude oil from domestic producers.

This has become a source of concern to stakeholders who feel the strategy could risk further driving investors from the industry.

Meanwhile, Legit.ng had reported that Dangote Refinery will receive crude oil from NNPC by December. The biggest African refinery is expected to receive six cargoes for a test run.

In an earlier report, analysts tracking the refinery’s development said Dangote Refinery is still several months from full-scale production of fuels including high-quality gasoline.