Secret Investment: How much is NNPCL’s money in Dangote Refinery?

If we must address the bunch of lies or rather propaganda campaigns being dished to us by the Nigerian National Petroleum Company Limited (NNPCL) and possibly also by the management of Dangote Refinery in their ongoing altercations, we must first accept that both parties are not telling the whole truth about their business relationships in this matter of local crude availability, appropriate pricing, and off-taking of petrol for our local consumption.

We need to ask: How much in real terms is NNPC’s sum total stake in the Dangote Refinery?

It would be recalled that in 2021, the NNPC said it acquired a 7.25 per cent stake in the refinery for $1.0bn, with an option to purchase the remaining 12.75 per cent (making it 20 percent) stake at a later date. According to the energy company, the deal was financed by a forward sale agreement of $1.036 billion from Lekki Refinery Funding Limited, of which $1 billion was paid to Dangote refinery.

In a related development, NNPCL also raised over $2.3 billion from foreign creditors to invest in Dangote Refinery as the company’s Chief Executive Officer, Mele Kyari told us sometimes ago. Later the same organisation alerted us also that they were withering their stake in the project to just 23 percent of its original value. This was followed by another announcement that the state-owned oil firm was completely divesting its interest in the refinery project.

The Dangote Refinery was commissioned in May 2023 and at the occasion, Aliko announced that the NNPC Limited “now owns a 7.2 percent stake in the Dangote Petroleum Refinery, and not a 20 percent stake as initially announced before the inauguration of the facility at the Lekki Free Trade Zone.” It is said the refinery cost slightly over $20 billion and 7.2 percent of that amount is not $1 billion but let’s leave it at that first.

The question is: Did NNPCL divest its stake either completely or partially from Dangote Refinery? If it was a partial divestment, what is the current equity holding, and if it was full divestment, where is the money recovered from the offloading of the stake?

You see that NNPC leadership has serious case at hand and this may be the reason of their current hostile disposition towards Dangote and his refinery. NNPC cannot tell us it went abroad to borrow money with crude oil that we are yet to produce as collateral only to turn back for whatever reasons to tell us it has withdrawn all its stakes in the very same project it used the nation’s crude oil to stake. So where is the money?

NNPC should tell us how much of its money in totality is in Dangote refinery because what’s happening between the two entities is definitely a battle of thrones: why should you be ordering me on what to do as if you have forgotten that we are co-owners or more aptly that I am a major stakeholder in this Plant with you! This seems to be the NNPC’s mindset in this matter.

From the way NNPC is carrying on in the dispute or rather engagements with Dangote Refinery, it looks possible that the organisation may not have divested the huge resources it committed as stake in the refinery- the ones it openly acknowledged and the ones it chooses to keep secret. Several decisions that have come out of the engagement between the two parties point to the fact that NNPCL still sees itself as a co-owner of the refinery, if not how do you explain that the state-owned oil firm could be dictating the prices in which Dangote petrol should be sold across the country and in addition asking to be made the sole off-taker of all the PMS from the plant?

Even the way Dangote went about the issue of sourcing crude oil feedstock for the plant and the controversies around it suggested that the NNPC under the Buhari administration must have initially agreed to supply crude oil for processing at the plant either for free or at discounted rate if not, Dangote couldn’t have been talking the way it talked on both the NNPC and the foreign operators sabotaging the efforts of the refinery to come onstream by refusing local availability of crude.

Tragically, as already shown, President Bola Tinubu on his part will continue to be evasive or rather feign aloofness in this NNPC-Dangote perceived disagreement as the continued quarrel (or feigning of it) favours his greedy self-aggrandisement agenda. It’s in his own interest that the matter is never resolved so he can make maximum kill from his Malta refining and blending plant. It’s also possible he may be putting pressure on the NNPCL boss to stand up to Dangote if he does not want the dirty deals with Aliko to be made public by government. You see where Nigeria has found itself!

Any discerning mind must have by now come to full conviction that there’s likely a secret business relationship between Dangote Refinery and either the NNPCL as an entity or some powerful individuals in the organisation. If not, there’s no way any sane mind can rationalize the conducts and hostile disposition (or a pretence of it) by the NNPCL boss, Mele Kyari towards the Refinery and its coming onstream.

NNPC or some big people in the organisation must have committed huge resources as stakes in the Dangote project. The bickering and hostile disposition may be coming from the standpoint of feeling outsmarted or rather side-lined by the owners of the Plant now that the project has succeeded.

Dangote on his own also knows the agreement he entered with these “secret stakeholders” and the danger or rather dire consequences of renegading that’s why he is also not coming out full with the truth and facts of what’s going on between it and the state-owned oil firm.

Nigerians are the biggest losers or rather victims in all these because neither Mele Kyari and his NNPC nor Aliko and his Dangote Refinery will ever come out to tell us the full truth of their deals/agreements with each other because they know the consequences.

For Kyari, he dares not come out to say he or rather his organisation staked huge resources in tens of billions of dollars in cash or crude oil to ensure Dangote refinery was actualised for NNPC to only end up being just a fuel seller/distributor. We should ask NNPC: Is bunkering now more lucrative than refining your crude in your plants? “NNPC, may you not abandon your three and half refineries to become a petrol seller o,” Amin!

Today, it’s neither Aliko nor NNPCL that is suffering; it is the Nigerian masses that are confused and distressed over petrol – unavailability and outrageous price compared to disposable incomes. Is there anything that can show more how incompetent and incapable people in our governments could be?

As severally said by concerned Nigerians, Aliko’s brand new 650,000 bpd refinery is too big for Nigeria to allow the plant to fail. And only the Federal Government can help him out and both Kyari and Tinubu know this very well just that the half -baked solutions proffered by the President cannot address the problems but rather could lead to the demise of the refinery and collapse of our ailing national economy.

Of a truth, there is no way Tinubu’s idea of selling the obviously insufficient or rather unavailable domestic crude allocation to Aliko in local currency will solve the problem. Rather, it can only keep Aliko refinery on live support and deprive the CBN of scarce forex to allocate to other sectors of the economy thereby worsening the economy.

Schemes of NNPCL and arm twisting by Aliko notwithstanding, the fact is the refinery will degrade fast if it is unable to get 650,000 bpd or a very big chunk of it to run optimally while Aliko could head to financial ruin from losing millions of dollars operating an inefficient plant. So, the first and foremost solution is to ensure 650,000 barrels of crude or a sizable percentage of it are available at the Lekki plant for refining each day. Nothing short of this will do. Surely there must be a smart win-win approach to ensure a steady flow of crude oil feedstock to Aliko’s refinery that is much more friendly to Nigeria forex situation and national economy than President Tinubu has pretentiously ‘directed NNPCL’ to carry out as his naira-based solution which is another callous and unthoughtful policy pronouncement. God bless Nigeria!

• Izeze is celebrated Columnist and can be reached via [email protected]; 234-8033043009 (sms only)