NNPC had initially agreed to purchase the shares in the 650,000 barrels per day (bpd) refinery for $2.7bn. Credit: Bannafarsai_Stock/Shutterstock.

The Nigerian National Petroleum Corporation (NNPC) has seen its stake in the Dangote Refinery reduced from 20% to 7.2% following a failure to complete payment for its shares.  

This development was confirmed by Aliko Dangote, CEO of the Dangote Refinery, during a media parley at the refinery in Lagos. 

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Dangote explained that NNPC’s inability to pay the balance of its share by the due date in June resulted in the reduction of its stake.  

NNPC had committed to a 20% stake but has only fulfilled payment for 7.2%.  

Dangote, as reported by Nairametrics, said: “The agreement was actually 20% which we had with NNPC and they did not pay the balance of the money up until last year and then we gave them another extension up until June (2024) and they said that they would remain where they have already paid, which is 7.2%. So NNPC, the government (sic) owns only 7.2% not 20%.” 

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In a statement, NNPC said: “NNPC periodically assesses its investment portfolio to ensure alignment with the company’s strategic goals.  

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“The decision to cap its equity participation at the paid-up sum was made and communicated to Dangote Refinery several months ago.” 

NNPC, currently negotiating another oil-backed loan to bolster its finances, had initially agreed to purchase the shares in the 650,000bpd refinery for $2.7bn, according to Reuters.  

The state-owned oil company is facing challenges including debts owed to gasoline suppliers and the financial strain from gasoline subsidies.  

These issues have significantly impacted its cash reserves. 

Additionally, the Dangote refinery itself has had to contend with difficulties in securing sufficient crude supplies locally.  

Nigeria’s oil production has been hampered by underinvestment, pipeline vandalism and theft. 

Consequently, the refinery has resorted to importing US crude to achieve full capacity by the next year.  

In May, TotalEnergies secured its first supply agreement with the Dangote Refinery.