NNPC: 35,000 bpd was pledged to raise funds for 20% stake in Dangote Refinery

The Nigerian National Petroleum Company (NNPC) Limited says it pledged crude oil of 35,000 barrels per day (bpd) to raise funds to acquire 20 percent stake in Dangote Petroleum Refinery and Petrochemicals (DPRP).

In September 2021, NNPC acquired a 20 percent interest in Dangote Refinery for $2.76 billion.

Revealing details of the transaction, the national oil company, in its audited financial statements for 2022, said the investment is held by NNPC Greenfield.

According to the oil firm, NNPC Greenfield is a special purpose vehicle (which is 100 percent owned by NNPC) in trust for the company.

Explaining further, NNPC said the equity was acquired through $1.036 funding from Lekki Refinery Funding Limited, of which $1 billion was paid to Dangote Refinery and $36 million accounted for transaction costs.

“This acquisition was financed by a $1.036 billion funding from Lekki Refinery Funding Limited of which $1 billion was paid to Dangote Refinery and $36 million accounting for transaction costs,” the statement said.

To raise the $1.036 billion from Lekki Refinery Funding Limited, NNPC said it also entered a forward sale agreement (FSA) with the company.

The agreement, NNPC said, requires the sales of 35,000 barrels per day of NNPC’s future crude oil for the settlement of the $1.036 billion (N426.2 billion) funding received for the financing of investment in Dangote Refinery.

NNPC said the interest rate for the facility is a 3-month libor plus 6.125 percent.

The oil firm said the balance ($1.76 billion) of the cost of equity investments made in Dangote refinery will be paid upon completion of the refinery project or any other date agreed.

“The balance of the cost of equity investments made in DPRP FZE, which is USD1.76 billion will be paid upon completion of the refinery project starting April 1, 2023 or any other date agreed between the parties (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% of NNPC’s portion of any dividend declared by DPRP FZE throughout the repayment period,” NNPC said.

Dangote Refinery commenced production on January 12, 2024.