In a move to service its significant syndicated loan maturing in August 2024, the Dangote Refinery is planning to divest a 12.75% stake in the company.
This decision was revealed in a report by Fitch Ratings, a credit rating agency, which cautioned that the timing of the divestment and meeting the loan maturity are highly uncertain.
According to Fitch, the Nigerian National Petroleum Company Limited (NNPC) had earlier planned to acquire a 20% stake in the refinery but has since reneged on its decision. The NNPC acquired a 7.25% stake in the refinery for $1 billion in 2021 with an option to purchase the remaining 12.75% stake by June 2024. However, the national oil firm has not exercised its option.
In a statement, the Dangote Group’s President, Alhaji Aliko Dangote, confirmed that NNPC currently owns only 7.2% of the refinery, not 20% as previously believed. The NNPC has also confirmed that it decided not to invest further in the refinery, citing its periodic assessment of investment portfolios to ensure alignment with its strategic goals.
The development has sparked calls for an independent audit of the Dangote refinery-NNPC transaction. A former Minister of Education, Oby Ezekwesili, has questioned why the Nigerian government borrowed $3.3 billion from Afriexim-Bank to take a stake in the refinery, only to cap its investment at 7.2%. She has urged President Bola Tinubu to launch an immediate independent audit of the transaction to provide clarity on the matter.
The Dangote Refinery’s plan to sell a significant stake in the company raises concerns about its ability to service its loans and meet its financial obligations. The development is being closely monitored by investors and stakeholders, who are waiting for further clarity on the matter.
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