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Why NNPC Is Investing In Dangote Refinery—Kyari

Ebuka Daniel

The Group Managing Director of the Nigerian National Petroleum Corporation, Mr. Mele Kyari has said that the decision of the Corporation to invest in Dangote Oil Refining Company will guarantee energy security for the country.

Kyari said this on Tuesday during an interview on ‘Good Morning Nigeria’ show on the Nigeria Television Authority.

He said that the Corporation will be taking over at least 20 percent equity stake in Dangote Refinery, adding that the funding for the acquisition would be coming through borrowing and not from the Federal Government.

Kyari said that the loan to be borrowed to finance the acquisition of the 20 per cent stake in Dangote Refinery would be repaid on the back of the cashflow to be generated from the investment.

The NNPC GMD explained that with the Dangote Refinery projected to deliver about 50 million liters of petrol to the country, coupled with the take-off of the Port Harcourt, Wari and Kaduna Refineries’ project, Nigeria would become a hub of petroleum products in the continent.

He said, “This Refinery will deliver at least 50 million liters of PMS into the Nigerian market and there is no country anywhere that will sit and watch such enormous investments that is related to energy security anywhere in the world to look by the side. No one does this.

“We as a National Oil Company has the responsibility to ensure energy security for this country and the meaning of this is that you must secure the supply sources. And we have been trying to fix our refineries, we have awarded the contract for the fixing of the Port Harcourt Refineries well ahead of planned schedule.

“The Warri and Kaduna Refinery, we will issue the APC very soon and hopefully before the end of July. That will come parallel and we will deliver all of them around the same time. So the net effect is that you are going to have a petroleum product supply hub for West Africa.

“That means with the NNPC Refineries in place and Dangote Refineries operating and with other initiatives that we are making, we are going to have a massive hub of petroleum production in West Africa.

“This will change the flow of product supply in the whole globe.”

Kyari explained further that Nigeria will get value from the investments, stating that the NNPC is currently expanding its portfolios to give value for Nigeria in various sectors of the economy such as fertilizer and methanol.

The NNPC GMD added, “This investment is really a good deal for us because it will increase our portfolio and boost the size of our balance sheet.

“We are following international approved processes. No bank is going to give you a kobo if you don’t follow these processes. We are not taking government money to buy this equity. We are going to borrow on the back of the cashflow that will come from the Refinery, on the back of our transactions, equity and dividend that will come from this business.

“So, we are taking advantage of a business opportunity, I’m not sure that Mr. Dangote wants us to do this but this is what we want to do.”

Kyari noted that based on the governance structure of the NNPC, and in line with the due process policy of the Federal Government, the Dangote acquisition transaction would be taking to the Federal Executive for final approval.

He said, “This company (NNPC) is owned by the country and 200 million Nigerians and so we are doing this on their behalf. We will take this to the Federal Executive Council and get their endorsement because we believe this is the right thing to do. We are not exposing this country; we are making something that is beneficial for this country.

“No country will do that mistake of allowing such massive project of energy proportion to run without the government having a seat on the board.”

When asked what the impact of the investments will do to the price of petrol, he said this will take away the N21 per litre price of freight from the landing cost.

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