Good News as NNPC Repays Loan Taken to Acquire Stake in Dangote Refinery
- The NNPC has disclosed that it has repaid part of the loan taken to finance the acquisition of its stake in Dangote Refinery
- The company revealed that it has repaid 60% of the $1.036 billion loan it secured to finance a 20% stake in the refinery
- The company disclosed that it repaid $625 million of the loan, leaving a balance of $424 million
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Legit.ng’s Pascal Oparada has reported on tech, energy, stocks, investment and the economy for over a decade.
The Nigerian National Petroleum Company Limited (NNPC) has repaid 60% of the $1.036 billion loan it got in September 2021 to acquire a 20% stake in the Dangote Refinery.
The NNPC disclosed this in its financial report for the fiscal year ending December 31, 2023, under the “Financing of Investment in Dangote Refinery.”
Source: UGC
NNPC to supply 35,000 daily to Dangote Refinery
The document said that by the end of December 2023, the oil firm had repaid $625 million of the loan, leaving a balance of $424 million.
BusinessDay reports that the loan was arranged via a forward sale agreement with Lekki Refinery Funding Limited and carried an interest rate of 3-month London Interbank Offered Rate (LIBOR) plus 6.125%.
The NNPC financials stated that the company agreed to supply 35,000 barrels of crude oil daily as part of the deal to settle the $1.036 billion loan used to finance its investment in the refinery.
Initially, NNPC Greenfield Limited, an NNPC subsidiary, managed the investment. However, following a restructuring due to the provisions of the Petroleum Industry Act, the management responsibility moved to NNPC Downstream Investment Service (NDIS).
NNPC no longer hold 20% stake in Dangote Refinery
Reports say the restructuring also changed the payment arrangement, with the remaining balance of $1.76 billion for the equity stake being agreed now to be paid in cash, replacing the earlier proposal of a $2.5 per barrel on crude oil prices as compensation.
NNPC now holds about a 7.25% stake in the Dangote refinery as of December 2023.
The company’s audited financials stated that it acquired a 20% stake in the $19 billion refinery, of which $1 billion was paid directly to the Dangote Refinery, while $36 million covered transaction fees.
The loan for the acquisition was secured from Lekki Refiner Funding Limited.
Legit.ng earlier reported that the Chairman of the Dangote Group, Aliko Dangote, stated that the NNPC no longer holds a 20% take in the refinery as it failed to meet the deadline for the repayment.
NNPC clarifies divestment
NNPC clarified in a statement that the current 7.2% stake in the 650,000-capacity refinery was due to a strategic decision rather than a failure to meet its obligations.
NNPC’s spokesman, Olufemi Soneye, said the decision to reduce the stake was deliberate and was communicated to Dangote earlier.
Dangote Refinery to sell NNPC’s 12.5% stake to Nigerians
Legit.ng previously reported that the Dangote Group is reportedly exploring the sale of a 12,5% stake in the newly commissioned refinery to meet its financial obligations.
The global rating agency, Fitch Ratings, disclosed this in its report on the refinery.
The Nigeria National Petroleum Company Limited (NNPC) acquired a 7.25% stake in the facility for $1 billion, with an option to purchase the remaining 12.75% stake by June 2025.
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Source: Legit.ng
