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Tuesday, May 17, 2022

Nigeria in talks with banks to raise funding for 20% stake in Dangote Refinery ~NNPC Chief

The Nigerian National Petroleum Corporation (NNPC) is in talks with some banks to raise around N19 billion to fund its proposed 20 percent equity stake in the Dangote Petrochemical Refinery Company, according to the Group Managing director of the state-owned oil firm, Mele Kyari.

Kyari who spoke on Channels TV programme on Tuesday said negotiations were ongoing with the selected banks and that the loan will be repaid from the cash flow from the investment.

The NNPC chief had earlier said the country is taking strategic stake in the 650,000 barrels capacity refinery being built by Africa’s richest person, Aliko Dangote because of the sensitivity of the company to the economy.

“The investment is sustainable and that is why the banks have come forward to lend to us, so that we can take equity in this. We are not putting anything at stake.

“The information in the public domain alluding that the investment is inappropriate is not correct. We are very proud that we did.

“This is good for our shareholders which include 200 million Nigerians, who would have also happily bought shares from this refinery.

“But have done so on their behalf. Ultimately, the value will come to the country.

“There’s no way you can watch a business of this magnitude, of this sensitive to run without an embodiment of the national oil company. No country does that.”

However, he said it is important that the NNPC, as the national oil company, guarantee energy security for the country by “having a say in the board of the refinery.”

He said the NNPC will take 20 percent equity in the refinery which has the capacity to produce 650,000 bpd per day.

“Dangote refinery will come to work, by 2022, it should come into production and what that should do is to deliver over 50 million litres of gasoline, to be specific, into our market.

“We are also working on our refineries to make sure we fix them; we have awarded the Port Harcourt refinery rehabilitation and ultimately we are close to that of Warri and Kaduna, so that very soon, in July, all of them will work contemporaneously and at the end of the day, we will deliver all of them.

“The net effect is that you are going to have an environment where Nigeria becomes a hub for petroleum supply.

“It is going to change the dynamics of petroleum supply, even globally, in the sense that the flow is coming from Europe today and it is going to be reversed to some other direction. We will be the supplier for West Africa legitimately and also many other parts of the world.

Nigeria, Africa’s biggest oil producer, depends largely on importations of refined products for domestic consumption as the four government refineries remained in comatose.

Several billions of dollars have also been spent by many governments to revive and rehabilitate the nation’s refineries but no success has been recorded in a very long time.

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“The meaning of this is that there is an opportunity thrown at us and I am not sure that Mr Dangote wants to sell his equity in the refinery.

“I can confirm that it was at our instant that we started the engagement; he did not want to sell his shares in this refinery.

“There is no country that would watch a business of this scale, which is bordering on energy security, which also has high implication even on the physical security of our country and you watch it that you don’t have a say.

“For us as a strategy, we will take equity in very significant businesses that are anchored on the oil and gas operations – fertilizer, methanol plants, modular refineries and so many other businesses that we are dealing with so that we can expand our portfolio but also as the national oil company, we have the responsibility to guarantee energy security for our country and there is nowhere you can have that say except you have a say in the board of this institution.”

“I am not sure Mr Dangote is very happy with this. We are taking 20 percent equity of the Dangote Refinery. There is a valuation process, it is very international and very regulated. No bank will give you money to buy stake,” he added.

Kyari further said that the NNPC is seeking the authority of the Federal Executive Council to close the deal which he said is worth about $19bn.

“We are not going to take government money to buy it, we are going to borrow because we know that this business is viable in the short term Banks have come

“We are very proud that we did this, this is good for our shareholders including all the 200 million Nigerians who will also be happily buying shares from this refinery if they have an opportunity but now we have done that on their behalf so that ultimately, the value will come to all of us.”

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