NNPC Borrows $1.036 Billion To Acquire 20% Stake In Dangote Refinery

The Nigerian National Petroleum Company (NNPC) Ltd has acquired a 20% stake in Dangote Refinery for $2.76 billion.

VerseNews reports that the funding, facilitated through Lekki Refinery Funding Limited, involved a $1.036 billion loan, of which $1 billion was paid to Dangote Refinery, and $36 million covered transaction costs.

NNPC pledged 35,000 barrels of crude oil per day for the loan repayment, with an interest rate of three-month LIBOR plus 6.125%.

“In September 2021, the NNPC entered into a forward sale agreement with Lekki Refinery Funding Limited, to supply 35,000 barrels of crude oil per day for the settlement of the $1.036 billion (N426.2 billion) funding already received for the financing of the investment in Dangote refinery.

“The interest rate for the facility is a three-month LIBOR plus 6.125 per cent. The arrangement has been scheduled to commence on August 30, 2023. Project Bison has been transferred to NNPC Limited,” the NNPC 2022 audited statement reads.

To complete the payment, NNPC agreed to a $2.5/bbl discount on the official selling price per barrel on 300,000 barrels per day.

Additionally, Dangote Refinery will receive 100% of NNPC’s portion of any declared dividends throughout the repayment period.

The remaining $1.76 billion of the investment will be paid upon the completion of the refinery project, starting April 1, 2023, or an agreed-upon date.

“In September 2021, the NNPC acquired a 20 per cent interest in Dangote Petroleum Refinery and Petrochemicals Free Zone Enterprise (DPRP FZE) worth $2.76 billion. This investment is held by NNPC Greenfield (a special-purpose vehicle that is 100 per cent owned by NNPC) in trust for NNPC.

“This acquisition was financed by a $1.036 billion funding of which $1 billion was paid to Dangote Refinery and $36 million accounting for transaction costs.

“The balance of the cost of equity investments made in DPRP FZE, which is $1.76 billion will be paid upon completion of the refinery project starting April 1, 2023 or any other date agreed between the parties (the NNPC and Dangote Oil Refining Company Limited) via a combination of a $2.5/bbl discount on the official selling price per barrel on 300,000 barrels per day to DPRP FZE, and 100 per cent of NNPC’s portion of any dividend declared by DPRP FZE throughout the repayment period,” the statement reads.