Dangote Turns Down NNPC Offer To Increase Stake In Refinery

The President of the Dangote Group, Alhaji Aliko Dangote, on Wednesday said that the group turned down requests by the Nigerian National Petroleum Company (NNPC) Limited to increase its stake in the Dangote Petroleum Refinery.

In an interview with the Chief Executive Officer of the Norwegian Sovereign Wealth Fund, Nicolai Tangen, monitored by Channels Television, Dangote explained that the NNPC’s offer was rejected because the company wants to give other Nigerians the opportunity to own shares in the plant, as the Group plans an initial IPO for the Refinery.

In 2021, the NNPC acquired the 7.25 per cent stake in the refinery for $1bn, with an option to acquire the remaining 12.75 per cent stake by June 2024.

During the interview with Tangen, Dangote revealed that the national oil company had attempted to acquire more stakes in the refinery, but the offer was turned down.

The Industrialist also said civil war and government policy inconsistencies are the Refinery’s biggest risks.

“The other biggest risk is government inconsistencies in policies, and we are addressing that one because if you look at our refinery, the national oil company already owns 7.25 per cent, and they are trying to buy more. We are the ones that said no; we want to now spread it and have everybody be part of it.”

The state oil firm, under the former Group Chief Executive Officer, Mele Kyari, reduced its stake in the refinery from 20 per cent to 7.25 per cent. Aliko Dangote made this public in 2024. He disclosed that the NNPC had only a 7.2 per cent stake in the refinery and not 20 per cent as many Nigerians believed.

“The agreement was actually 20 per cent, which we had with NNPC, and they did not pay the balance of the money up until last year; then we gave them another extension up until June (2024), and they said that they would remain where they had already paid, which is 7.2 per cent. So NNPC owns only 7.2 per cent, not 20 per cent,” Dangote stated in 2024, to the surprise of many Nigerians.

While defending why the NNPC reduced its planned stake in the Dangote refinery in 2024, the NNPC’s former spokesman, Olufemi Soneye, said it was to invest in compressed natural gas stations.

To raise funds for building the refinery, Dangote said he got a lot of support from various financial institutions, including Nigerian banks.

According to him, the initial plan was to fund most of the construction work “from our internally generated funds”, but because of naira devaluation, the group “had to rely on Afreximbank, Africa Finance Corporation, Zenith Bank, Access Bank, UBA and a couple of the local banks, but of course we also have a very good relationship with the Standard Bank of South Africa and, at the beginning, Standard Chartered Bank of the UK”.

He maintained that the company was lucky and what happened when the plant was completed “turned out to be much more than our own expectations”.

Also during the latest interview, Dangote revealed that his refinery is now operating at 661,000 barrels per day. This was even as he recounted the gains of the US-Iran war for its refinery and fertiliser business.

Dangote boasted that the company has proved its capacity by building a refinery of that magnitude in Nigeria, commissioning it, and running it above its 650,000 bpd nameplate capacity.

With this, he said financial institutions would be ready to support the group whenever the need arises.

“The refinery has been tested. We have now processed even crude at 661,000 barrels a day. So we have demonstrated that capability. Now, a lot of financial institutions are saying that, ‘Yes, if it is you doing this project, we are there to back you because we know that you can deliver; you have the capacity, you have the knowledge, and you have the experience,” he said.

Asked to speak about the impact of the Middle East crisis on his businesses, Dangote recounted the gains of the war, which has sent energy prices high across the globe.

To Dangote, there were windfalls as the demand for fuel rose globally, even with the prices. According to him, fertiliser has risen from $400 to $850 per tonne. Polypropylene went up from $900 to about $3,000. Dangote added that most Nigerian plastic companies would have shut down by now if not for his polypropylene.

“The effect of the war on our businesses is more beneficial than a downside because today, fertiliser is in very high demand. In February, before the Middle East crisis, urea was selling for about $400 a tonne. Today we are selling a tonne of fertiliser for $850, and we are actually oversold. In plastics, polypropylene has moved from $900. In the UK today, it is about $3,000.

“And if not because of the polypropylene we are producing today, all the plastic industries in Nigeria would have shut down because there’s nowhere you can even get it. Our aviation fuel is oversold till the middle of July, and we’re producing 20 million litres of jet fuel a day,” Dangote disclosed.

Speaking about crude supply, Dangote said, “We source about 56 per cent from Nigeria and some from Angola. We buy quite a bit from Angola, we buy from Libya, and we buy from the US. At one point, we were doing about seven to eight cargoes of WTI from the US. But we’re getting more of Nigeria’s crude now. We have to now buy 21 cargoes every month. That’s how big we are. And we’re more than doubling the refinery. You know, in the next 30 months, we will be at 1.4 million barrels per day, which is huge.”

Aliko Dangote named a category of those he called the ‘Mafia,’ trying to sabotage the refinery.

“The Mafia are the people who are actually benefiting because Nigeria was giving out almost $10bn every year as a subsidy. There are shippers who are making tonnes of money. There are traders who are making a lot of money buying crude and sending us refined products. There are also the local people; because it was subsidised, very few people are getting allocations. So they are making billions of naira. So, these are the people that did not want us to settle down because they believed that we were coming here to displace them, and of course, that’s what we have done now,” he said.

He added that plans are underway to sell stakes and inject about $45bn into the businesses for a target of $100bn revenue by 2030.

“We are coming up with selling part of the business, getting more investors into the business, and also making sure that we continue to grow the business. Cement production is going to 100 million tonnes. In cement, we don’t even need much money; we are getting financing, and the cash generation is very liquid.