Dangote Refinery resolves crude supply issues, to roll out petrol in August

• NNPCL’s stake in refinery reduced to 7.2% over unpaid commitment
• Equity participation cap communicated to Dangote months ago, says NNPCL
• Gasoline production to commence in July with sales from August
• Dangote targets $30b in revenue to become Nigeria’s largest FX supplier
 
Dangote Refinery yesterday announced that it has resolved the crude supply issues that had previously impeded its operations through the help of the Nigeria National Petroleum Company Limited (NNPCL) and the Federal Government, and is now set to roll out Premium Motor Spirit (PMS), also known as petrol, in August 2024.
  
President of the refinery, Aliko Dangote, disclosed this during a tour of the facility by journalists, announcing that the crude supply challenge, which had disrupted the supply of petrol, was resolved last week following government’s intervention.
  
The earlier hiccups in crude supply had made the refinery falter on its initial promise for a July rollout. But with the resolution of the logistics challenge, the refinery has now scheduled the production and distribution of petrol to commence next month.
   
President of the group, Aliko Dangote, however, hoped that the International Oil Corporations (IOCs) would keep to the terms of the Petroleum Industry Act (PIA) that gives priority to local consumption of crude.
  
Dangote also revealed that NNPCL no longer owns a 20 per cent stake in its refinery as the firm now owns only 7.2 per cent of the refinery due to what he described as the company’s failure to pay the balance of their share, which was extended till June 2024.
  
He stressed that while NNPCL had promised to provide the counterpart funds, it has been unable to meet its obligations, thus reducing its stake in the $20 billion refinery to 7.2 per cent.
  
Recall that in September 2021, NNPC acquired a 20 per cent stake in the Dangote Refinery for $2.76 billion. According to NNPC’s audited financial statements for 2022, this investment is held by NNPC Greenfield.
  
NNPC Ltd at the time stated that the remaining balance of $1.76 billion for its equity investment in the Dangote refinery would be paid upon the project’s completion or at a mutually agreed date.
  
NNPCL, however, clarified the 7.2 per cent stake, in a statement by its Chief Corporate Communications Officer, Olufemi Soneye, who stated that the decision to cap its equity participation at the paid-up sum was made and communicated to Dangote Refinery several months ago.
 
“NNPC Limited periodically assesses its investment portfolio to ensure alignment with the company’s strategic goals. Several months ago, we made a commercial decision to cap our investment at the amount already paid. This decision was taken by NNPC Ltd and has no impact on our business,” he said.
  
Dangote also revealed that gasoline production would commence in July, while sales would start from August as the refinery is ramping up its production to reach 500kbpd (15 crude cargoes a month) by next month, while they project 550kbpd by end of the year, and 650kbpd by Q1,2025.
  
Adding that the refinery’s total storage capacity of 4.5 billion litres can cover 20 days crude requirement with product storage for 15 days of Nigeria’s gasoline consumption, he mentioned that the refinery can meet Nigeria’s requirements and have surplus for exports  with its annual revenue projected to exceed $26 billion.
  
Dangote also announced plans to list the fertiliser and petrochemical business of its refinery on the stock exchange in the first quarter of 2025, noting that the refinery would also resume fertiliser production in two weeks.
  
He stressed that this would give farmers more access to fertiliser for their farm products as there was a massive request for fertiliser from Nigerians and the rest of Africa, hence, his Group had no choice but to respond positively.
 
“We are investing in gas midstream infrastructure to support gas-based industries, we have built over 200km of gas pipelines in partnership with NGIC on a BoT basis, we also have other projects in the pipeline including: 3 bcf EWOGGS offshore pipeline (design and engineering completed, awaiting commercial framework), 600 mscf onshore gas pipeline (construction stage) 300 mscf gas processing facility (design stage). These projects will help deliver gas for further investment and also help stabilise gas pressure in ELPS,” he said.
  
The Africa’s richest man also revealed that the Dangote Group is targeting $30 billion in revenues by the year 2025, whilst projecting to become the largest supplier of foreign exchange in the FX market in the nearest future.
 
He stated that the group plans to become independent of the Central Bank of Nigeria (CBN) in terms of forex sourcing as it aims to shift its revenue composition in the cement business from the current 75 per cent to 15 per cent in the future.
  
“What we are trying to do is to totally get ourselves out of the demand of foreign exchange from the CBN and be the biggest supplier of foreign exchange in the foreign exchange market. So, 75 per cent of our revenue used to come from our cement business and 80 per cent of our EDITDA is from Nigeria and 90 per cent of the revenue comes from various local currencies, which is a high risk.
  
“So 15 per cent of the revenue going forward will come from cement from 75 per cent and 50 per cent of our EBITDA will come from outside Nigeria including exports and 75 per cent of the revenue will be in hard currency,” he said.
  
He added that the group would invest around $900 million so that in the next four years, there will be no need for raw sugar imports into the country. He reiterated that there would be an end to sugar import in the country.

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