Why we’re borrowing to buy 20% stake in Dangote Refinery – FG

Why we’re borrowing to buy 20% stake in Dangote Refinery – FG

The Group Managing Director of the Nigerian National Petroleum Corporation (NNPC), Mallam Mele Kyari, has explained the rationale behind federal government’s sudden interest in Dangote Refinery business.

During a programme on Channels Television on Tuesday, Kyari again confirmed the proposed acquisition of 20 per cent stake in Dangote refinery, noting however that Dangote is even reluctant to sell his equity in the investment but the government ignited the deal.

He added that the NNPC was borrowing to buy the stake in the refinery because the refinery business is viable and sustainable.

The NNPC had announced in May that it was in advanced talks with Dangote Industries to acquire a 20 per cent stake in the 650,000 bpd refinery.

Kyari said government money would not be used for the stake acquisition.

He said, “We are borrowing on the back of the cash flow of this business. We know that this business is viable, it will work and it will return dividends.

“It has a cash flow that is sustainable because refinery business, in the short term, will continue to be sustainable. That’s why banks have come forward to lend to us, so we can take equity in this.

“There is no resource-dependent country that will watch a business of this scale, which is bordering on energy security and has implications for fiscal security of the country, and you don’t have a say. And for us, as a strategy, we started this process long before Dangote started his refinery project.”

According to the Minister, the NNPC takes equity in very significant businesses that are anchored on the oil and gas operations: fertiliser, methanol plants, modular refineries and others.

He said the Dangote refinery would start production by 2022, adding that it would deliver over 50 million litres of petrol into the Nigerian markets.

Kyari

He said, “We are also working on our refineries, to ensure that we fix them. We have awarded the contract for Port Harcourt refinery rehabilitation. And ultimately we are going to close that of Warri and Kaduna very soon in July, so that all of them will work contemporaneously.

“The net effect is that you are going to have an environment where Nigeria becomes the hub of petroleum products and supply. It’s going to change the dynamics of petroleum supply globally in the sense that the flow is coming from Europe today and it is going to be reversed to some other direction.”

Kyari said Nigeria would be the supplier for West Africa and many other parts of the world.

He added, “So the meaning of this is, there is an opportunity that has been thrown at us. And I’m not sure Mr Dangote wants to sell his equity in the refinery.

“I can confirm that it was at our instance that we started this engagement. He did not want to sell his shares in this refinery.”