- Dangote condemned Nigerian National Petroleum Company Limited (NNPC) stake reduction as a major mistake
- Expected delivery of 390,000 barrels per day will help stabilise the naira, Dangote disclosed
- The billionaire expressed regret over not purchasing Arsenal football club, emphasising his commitment to his business ventures
Aliko Dangote said that the Nigerian National Petroleum Company Limited (NNPC) made a significant error by lowering its stake in the facility from 20 per cent to 7.2 per cent.
This was disclosed during an interview with Bloomberg Television in New York on Monday, September 23.
The African businessman and President of the Dangote Group mentioned that although he has two oil blocks expected to begin production in October, he probably won't invest significantly in Nigeria’s upstream industry.
Dangote believes NNPC's decision to remain at 7.2% is a mistake
He expressed that further negotiations were off the table, highlighting that despite the deal's advantages, the NNPC had made errors in its handling.
“We gave them (NNPC) a good deal. We said, okay, fine, we structured an agreement. The first agreement was that they were going to pay us a billion dollars. The deal was about $2.79 billion. And then the balance of the money, $1 billion, which they paid us over a year and a half ago, and then the balance of the money was split into two.
“One portion was that every crude they supply to us, 300,000 barrels per day, we’ll deduct $2 and then up to the time they finish paying that, one third. The other one-third will come out of their own profit. So, why NNPC opted out is a little bit confusing.
“They wanted this agreement to be changed where they wanted to pay cash, not in any other way. So, we said, okay, fine. We signed another agreement, you know, cancelling the other one. The new agreement that we signed was for them to pay us after one year, no interest, after one year, they’ll pay us the balance of $1.8 billion.
“The month for them to pay was June. And by June they came back to us and said, no, they’ve changed their minds and they want to remain at 7.2 per cent. So, okay, fine. So, we left it and we own now the rest of the shares, they own 7.2 per cent. And that’s what it is. But I think they made a big mistake.
Dangote declares further negotiations with NNPC off the table
“But no, there’s no negotiation. The agreement is finished, dead, completed. It’s 7.2 per cent,” Dangote stated.
The billionaire businessman also mentioned that the NNPC has agreed to deliver 390,000 barrels per day to the refinery in October, stressing that settling transactions in Naira might lessen the pressure on the local currency by around 40 per cent.
However, regarding the reduction of its stake in the refinery, the NNPC defended its choice, emphasising plans to focus more on cleaner energy alternatives such as Compressed Natural Gas (CNG).
Dangote emphasised that 90 per cent of the world didn’t truly believe the refinery would succeed while expressing personal satisfaction with the progress achieved to date.
He clarified that the company had already incurred loans totalling approximately $2.4 billion while the refinery was still seeking an appropriate location due to the complicated issues at play, reiterating that everything was developed from the ground up.
Dangote highlights sensitivity of subsidy issues
Addressing recent suggestions that he should invest in the upstream sector to prevent reliance on oil producers, Dangote stated that despite having two oil blocks beginning production this October, he does not intend to invest heavily in that segment.
“Well, our upstream, you know, is not big. We have two oil blocks which we have and we are starting production this October,” Dangote added.
Dangote confirmed that the federal government holds the exclusive authority to end the decades-long fuel subsidy, but he noted that a comprehensive agreement regarding future product supply will be established in the coming days.
“Subsidy is a very sensitive issue. Once you are subsidising something then people will bloat the price and then government will end up paying what they are not supposed to be paying,” the tycoon said. “Removal of subsidy is totally dependent on the government, not on us,” he stated.
Dangote stated that with President Bola Tinubu's recent directive for the NNPC to sell crude oil in naira and for the Dangote refinery to do the same with petrol, the naira is expected to stabilise soon.
Fuel from Dangote refinery may stabilise naira, says Billionaire
“Petroleum products consume about 40 per cent of our foreign exchange,” Dangote said, adding that fuel from his refinery, which started supplying petrol on September 15 to the state-owned oil company for domestic sale, “can actually stabilise the naira.”
He mentioned that as petrol refining begins in Nigeria, the real consumption of the product, which he termed 'guesswork,' will soon be brought to light.
“We are going to actually put a tracker on them (trucks) to be sure they are going to take the oil within Nigeria. And that, I think, can help the government save quite a lot of money,” he added.
He further said that talks with the government concerning pricing were still active, conveying his confidence in the minister of finance and FIRS chief Zaach Adedeji to work through any remaining issues.
He mentioned that from October, the NNPC will deliver about 12 million barrels, with a daily allocation of 390,000 barrels.
Dangote to produce gasoline, diesel, and aviation soon
“Already we have agreed, like, for example, in October, they (NNPC) are going to give us 12 million barrels, which is averagely about 390,000 barrels a day, which we’ll refine. We’ll sell both gasoline, diesel, and aviation fuel, and if there’s any excess, we’ll export,” Dangote stated.
“It wasn’t really a disagreement, per se. NNPC bought from us this particular one on the 15th of September at the international price, which they also bought over 800,000 metric tons of gasoline, imported.
“So the one that they bought from us actually is cheaper than the one they are importing. And so when they announced our price, the guy (NNPC spokesman), I don’t know whether he was authorised or not, but it wasn’t really the real price.
“What they have announced, yes, most likely that is what it cost them, including profit, including whatever, but they have never added profit to their cost. But their own imported one is almost, maybe about 15 per cent to 20 per cent more expensive than ours,” he said.
He maintained that the highly publicised 'raid' on his office was intended to embarrass the company, despite its full cooperation with the Economic and Financial Crimes Commission (EFCC) throughout the process.
Dangote remains a devoted Arsenal fan despite not buying the club
“They visited the office and they didn’t talk to anybody. They did not arrest anybody. They just came and, you know, and left just to register an embarrassment and that’s all,” he stressed.
He also said that concerning his past desire to buy Arsenal football club, he was eager at the time, but that decision would have hindered the timely completion of the $20 billion refinery.
“I think that time has passed. That time, Arsenal wasn’t doing well. I think, you know, I don’t have that kind of excess liquidity to go and buy a club for $4 billion, so to speak, and use it as a promotional something. I’d rather do something with the money.
“I will continue to be the biggest fan of Arsenal. I watch their games every day. Any time that they are playing, I will watch. So I will remain a major supporter of Arsenal, but I don’t think it makes sense today to buy Arsenal.
“Actually, I regret not buying it before, but my money was more needed in completing my project than buying Arsenal. I would have bought it for $2 billion, but I wouldn’t have been able to finish my project,” Dangote expressed.
Dangote refinery starts petrol production, raises hope of addressing Nigeria's fuel crises
Meanwhile, TheRadar earlier reported that the Dangote Refinery Plc had started petrol production, marking a significant milestone for Africa's largest refinery.
The $20 billion facility has a daily capacity of 650,000 barrels and is expected to reduce Nigeria’s dependence on imported oil products.