Table of Contents
Key Points
- NNPCL repaid $625 million of its $1.036-billion loan for a stake in Dangote Oil Refinery.
- The loan repayment and management transition to NNPCL’s Downstream Investment Service followed organizational restructuring.
- Despite reducing its stake to 7.25 percent, NNPCL remains committed to its investment in Africa’s largest refinery.
The Nigerian National Petroleum Company Limited (NNPCL) has repaid $625 million of the $1.036 billion it borrowed to buy a 20-percent stake in the Dangote Oil Refinery.
As of Dec. 31, 2023, a balance of $424 million remains. This repayment forms a key part of NNPCL’s decision to establish a presence in the refinery located in Lagos’ Lekki Free Zone.
Lekki Refinery Funding Limited provided the loan with an interest rate of three-month LIBOR plus 6.125 percent. Initially, NNPC Greenfield Limited managed this investment.
However, following the Petroleum Industry Act restructuring, NNPCL’s Downstream Investment Service (NDIS) took over management. This shift changed the payment method from a crude oil discount to direct cash payments.
Adjustments in stake ownership and future prospects
Initially owning a 20 percent stake, NNPCL now holds only 7.25 percent after failing to meet the complete payment schedule. Aliko Dangote, the refinery’s owner, pointed out the decreased stake due to NNPCL’s incomplete payments.
Femi Soneye, NNPC’s chief corporate communications officer, stated that the team had planned the reduction in stake and informed Dangote several months before.
Despite the smaller stake, NNPCL stays committed to its investment in the refinery, which will be Africa’s largest and the world’s largest single-train facility with a 650,000 barrels per day capacity. This investment aims to boost Nigeria’s energy sector and stabilize the economy.
