The Dangote Refinery is set to divest a 12.7% stake in 2024 to address loan servicing needs, according to a report released by Fitch Ratings on Monday. The move comes as the Nigerian National Petroleum Company Limited (NNPC) has opted not to exercise its option to acquire an additional 12.75% stake in the refinery.
Originally, in 2021, NNPC acquired a 7.25% stake in the Dangote Refinery for $1 billion, with the option to purchase the remaining 12.75% by June 2024. However, NNPC has decided against increasing its stake, which Fitch suggests could affect the refinery’s ability to manage its debt obligations.
Fitch noted that the Dangote Group plans to use proceeds from the stake sale to service a significant syndicated loan due in August 2024. The rating agency expressed uncertainty about the timeliness of this divestment and the ability to meet the upcoming loan maturity.
In a recent statement, Dangote Group President Alhaji Aliko Dangote clarified that NNPC’s stake in the refinery is currently 7.2%, not the 20% many Nigerians believed. Dangote explained that NNPC had not fulfilled the financial requirements for the additional stake, despite extensions granted until June 2024.
NNPC confirmed the decision to cap its investment at 7.2%, citing periodic assessments of its investment portfolio to align with strategic goals. NNPC spokesperson Olufemi Soneye noted that this decision was communicated to Dangote Refinery months ago.
In response to these developments, former Minister of Education Oby Ezekwesili has called for an independent audit of NNPC’s investment decisions concerning the Dangote Refinery. She questioned the rationale behind the reduced investment, particularly in light of the government’s reported $3.3 billion loan from Afriexim-Bank for this purpose. Ezekwesili urged President Bola Tinubu to initiate an independent review to clarify the situation.