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The Dangote refinery is being built in the Lekki Free Trade Zone (File Photo)

NNPC chief comments on plan to

acquire stake in Dangote refinery

NIGERIA MELE Kyari, the group managing director of NNPC made “a very calculated and con-
Nigerian National Petroleum Corp. (NNPC), scious decision,” he added. “First, there is no
spoke to members of the House of Represent- resource-dependent country like ours any-
atives’ Committee on Finance last week about where, and with a national oil company will have
the government’s plan to acquire a stake in the a venture of this size and magnitude with its very
650,000 barrel per day (bpd) Dangote refinery. clear security implications that is situated in a
Speaking during a discussion of the Medi- free trade zone. Literally, this refinery is not in
um-Term Expenditure Framework (MTEF), this country.”
Kyari said that this decision had been taken to Kyari also drew attention to the country’s
ensure that the refinery bought Nigerian crude. energy security challenges, noting that Nigeria
Aliko Dangote, the head of the Dangote Group, relies on imports to cover 100% of domestic
“has the right to buy oil from anywhere,” Kyari demand for refined fuels. “As we speak today, we
commented. “So you can’t force him to buy. We don’t have any strategic storage or arrangement,”
structured our equity participation that this he said. “So no [other] country [would] allow
refinery must buy at least 300,000 [bpd of] crude any venture of this nature to exist without having
from us. This guarantees [our] market”. a seat on its board.”
He added: “Today, every country is strug- He emphasised that the financial terms
gling to secure market for their crude oil. This of the deal provided NNPC with significant
refinery does not owe us any responsibility if we upside. Because the Dangote refinery will be
don’t have this arrangement. That is why we tied located in the Lekki Free Trade Zone, “there are
our participation to the fact that this refinery several incentives granted to this business,” he
must buy from us.” explained.
With the refinery having a high Nelson For example, he said, the price tag for the
complexity index, it will be able to process a investment will be $2.76bn rather than $5bn for
wide variety of crudes. Accordingly, Kyari said, the 20% stake, which effectively gives NNPC a
NNPC perceived that it needed to act to protect net refining capacity addition of 130,000 bpd. “It
state interests. is simply impossible to build a refinery of that
He described the decision as an informed capacity with that amount of money,” he said.
and pragmatic one and also confirmed that “This is not just a refinery, but a refinery with
the Cairo-based lender Afreximbank would be a petrochemical component. So somebody has
involved in the acquisition. Afreximbank has done all the [grunt] work for us, and we are tak-
already provided NNPC with $1bn to carry out ing a stake in it.”
the rehabilitation of the 210,000 bpd Port Har- Comments like these are unlikely to endear
court refining complex. Dangote to the arrangement, and Kyari
“We simply saw this opportunity. We said acknowledged this in his comments, saying: “Mr
are not going to take any government money to Dangote may not be excited [about] it.”
put into this,” he commented. “We are borrow- However, he concluded his statements on a
ing money from the Afrexim consortium to pay positive note. “This is a very informed policy
for our initial payment and also tied [Dangote’s] decision that will guarantee security because we
subsequent payment to [it] buying from our will have a seat,” he said. “We will have [the] right
production.” to 20% of the production from this facility.” ™

P6 www. NEWSBASE .com Week 35 01•September•2021