NNPC Will Borrow To Buy 20% Stake In Dangote Refinery ~ Kyari
Group Managing Director of the Nigerian National Petroleum Corporation, Melee Kyari, had noted that the African billionaire and business magnate, Aliko Dangote, does not want to sell shares in his refinery and petrochemical project under construction in the Lekki Free Zone, Lagos, Nigeria.
Kyari, said it is important that the NNPC, as the national oil company, guarantee energy security for the country by “having a say in the board of the refinery”.
The NNPC GMD spoke on Tuesday, June 29, 2021, when he featured in Channels Television’s ‘Sunrise Daily’ programme.
According to him, the NNPC will take 20 per cent equity in the Dangote Refinery which has the capacity to produce 650,000 bpd per day.
Nigeria, Africa’s biggest oil producer, has for several years been importing the bulk of its refined petroleum products from Europe and other places as a result of the inability of its refineries to refine crude oil abundant in the country.
The country has four national refineries including the Kaduna Refining and Petrochemical Company, Port Harcourt Refining Company and Warri Refining and Petrochemical Company.
Last year, a total of N81.41bn was expended on the four refineries between January and August even though the facilities never refined a drop of crude oil all through the period.
Several billions of dollars have also been spent by many governments to revive and rehabilitate the nation’s refineries but no success has been recorded in a very long time.
The consuming public continues to bear the brunt of the government’s inability to make its refineries functional. Today, petrol sells for between N163 and N 165 per litre in the country, with the NNPC mulling an increment, saying the current pump price is short of petrol landing cost which it said is around N232 per litre.
With epileptic power supply, Nigerians rely on petroleum products to generate energy; power their vehicles, and generating sets. These, no doubt, make the cost of living for average citizens burdensome, especially with minimum wage at N30,000 per month for each worker, a paltry sum hardly enough for an individual to survive a month, not with the rising food prices in the West African country.
Many private entities have since identified the opportunity in the energy sector and came up with modular refineries which have the capacity to produce some thousands of litres of petroleum products but their output is far short of the daily petroleum consumption of Nigeria, with over 200 million people.
One of the big entrants into the energy sector is business magnate, Aliko Dangote. His refinery, which is projected to start production next year, is expected to fill in the gap for imported petroleum products.
Speaking on Tuesday, the NNPC GMD said, “Dangote refinery will come to work, by 2022, it should come into production and what that should do is to deliver over 50 million litres of gasoline, to be specific, into our market.
“We are also working on our refineries to make sure we fix them; we have awarded the Port Harcourt refinery rehabilitation and ultimately we are close to that of Warri and Kaduna, so that very soon, in July, all of them will work contemporaneously and at the end of the day, we will deliver all of them.
“The net effect is that you are going to have an environment where Nigeria becomes a hub for petroleum supply. It is going to change the dynamics of petroleum supply, even globally, in the sense that the flow is coming from Europe today and it is going to be reversed to some other direction. We will be the supplier for West Africa legitimately and also many other parts of the world.
“The meaning of this is that there is an opportunity thrown at us and I am not sure that Mr Dangote wants to sell his equity in the refinery. I can confirm that it was at our instant that we started the engagement; he did not want to sell his shares in this refinery.
“There is no country that would watch a business of this scale, which is bordering on energy security, which also has high implication even on the physical security of our country and you watch it that you don’t have a say.
“For us as a strategy, we will take equity in very significant businesses that are anchored on the oil and gas operations, fertilizer, methanol plants, modular refineries and so many other businesses that we are dealing with so that we can expand our portfolio but also as the national oil company, we have the responsibility to guarantee energy security for our country and there is nowhere you can have that say except you have a say in the board of this institution.”
“I am not sure Mr Dangote is very happy with this. We are taking 20 per cent equity of the Dangote Refinery. There is a valuation process, it is very international and very regulated. No bank will give you money to buy stake,” he added.
Kyari further said that the NNPC is seeking the authority of the Federal Executive Council to close the deal which he said is worth about $19bn.
“We are not going to take government money to buy it, we are going to borrow because we know that this business is viable in the short term
Banks have come forward to lend us,” Kyari stated.
The NNPC GMD also said, “We are very proud that we did this, this is good for our shareholders including all the 200 million Nigerians who will also be happily buying shares from this refinery if they have an opportunity but now we have done that on their behalf so that ultimately, the value will come to all of us.”