Page 4 - DMEA Week 23 2021

DMEA COMMENTARY DMEA

NNPC seeks loan for Dangote bid

Nigeria’s NOC is believed to have approached Afreximbank about a $2.5bn
loan to be used to acquire a minority stake in the Dangote Refinery.

AFRICA NIGERIA’S National Petroleum Corp. (NNPC) Dangote Group also became a shareholder in
is reported to be in talks for a loan to acquire a Afreximbank in 2016 after making a “substantial
minority stake in the Dangote Refinery while the investment” to acquire equity.
WHAT: facility’s developer has said it will be complete by Meanwhile, local media outlet the Daily
Afreximbank is already the end of the year. Independent this week quoted sources as say-
funding NNPC’s project Local press quoted sources as saying that ing that Dangote is struggling to arrange funds
to rehabilitate the the company has approached the African to complete the project and alleged that it had
Port Harcourt refining Export-Import Bank (Afreximbank) to bor- defaulted on a loan repayment.
complex. row around $2.5bn to buy a 20% interest in the Dangote Group refuted the claim and said it
facility which will have a throughput capacity has “always met and continues to fully meet” its
WHY: of 650,000 barrels per day (bpd) when it comes loan obligations. However, given the importance
Dangote Group already on-stream. to the Nigerian economy of a timely start-up,
has a deep relationship Meanwhile, Dangote Group said that con- supporting NNPC’s planned acquisition could
with the bank, which has struction of the refinery is now 79% complete bring multifaceted benefits.
already provided a loan and is expected to be finalised in December at
for the refinery. which point commissioning will begin. Timing
With all eyes on progress, group executive direc-
WHAT NEXT: Afreximbank involvement tor at Dangote Industries Devakumar Edwin
The developer reiterated Afreximbank is already supporting the Nigerian reiterated that the facility would be completed
that construction of the government with a $1bn loan to pay for long by the end of December.
facility will be complete overdue rehabilitation work on the company’s Speaking at the Nigeria International Petro-
in December with struggling 210,000-bpd Port Harcourt refining leum Summit (NIPS), he said: “The refinery has
commissioning beginning complex. so far achieved considerable milestones consid-
immediately thereafter. During negotiations for that loan, the Cai- ering the global health crisis that hindered the
ro-based bank insisted that NNPC hire a “pro- desirable progress [despite] some delays due to
fessional operations and maintenance company” the COVID-19 pandemic”.
to run the Port Harcourt units and the company He said that project construction had reached
announced soon after it would no longer operate 79% with overall project completion at 89.50%
the facility nor its other refineries at Kaduna and including engineering, procurement and con-
Warri. struction (EPC) work.
With this in mind, it may come as some sur- “At the current rate of progress, the mechan-
prise that Afreximbank would consider support ical completion is now expected to be accom-
NNPC’s involvement in a private sector facility plished by the fourth quarter. Commissioning is
just a few months later. expected to commence immediately” thereafter.
However, the bank already has a deep rela- Once complete, the facility will process
tionship with Dangote, having provided a sev- 650,000 bpd of varying grades of light and
en-year, $650mn loan in 2018 for the refinery’s medium crudes to produce fuels in line with
development. Euro-5 standards. These will comprise 10.4mn
Speaking in July that year, President and CEO tonnes per year (tpy) of gasoline, 4.6mn tpy of
Aliko Dangote said that lenders would provide diesel and 4mn tpy of jet fuels.
around $3.15bn of the roughly $15bn cost of Devakumar added that it will also produce
building the refinery, including $150mn from 690,000 tpy of polypropylene, 240,000 tpy of
the World Bank’s private sector arm. propane, 32,000 tpy of sulphur and 500,000 tpy
The deal with Afreximbank had been signed a of carbon black.
week or so earlier and followed a memorandum While there have previously been concerns
of understanding signed between the parties in about the level of fuel available to Nigerians from
June 2017 which provided for credit facilities of the facility, Edwin said that products would be
up to $1bn to be extended to Dangote Industries split between the Nigerian and export markets,
and its subsidiaries, and for broader fund-rais- specifying Europe and South America.
ing collaboration on the basis that the proposed Meanwhile, the company has previously pro-
plant would “boost intra-African trade volumes, vided assurances that the refinery’s purchase of
enhance continental value chains, and increase Nigerian crude would not have an impact on the
production and export of goods and services country’s 1.6mn bpd mandatory export volume
across Africa”. allocated by OPEC.™

P4 www. NEWSBASE .com Week 23 10•June•2021