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  • Oil & Gas - News
  • Updated: January 29, 2024

NNPC acquires stake in Dangote refinery

NNPC acquires stake in Dangote refinery

The Nigerian National Petroleum Company (NNPC) Ltd. has bought a 20% share in Dangote Refinery for $2.76 billion via a $1.036 investment from Lekki Refinery Investment Limited, with $1 billion paid to Dangote Refinery and $36 million for transaction charges.

According to data from NNPC Ltd's recently released audited financial report for 2022, the state-owned business promised to repay the debt with 35,000 barrels of crude oil per day (bpd).

The NNPC's 2022 audited statement read

“In September 2021, the NNPC entered into a forward sale agreement with Lekki Refinery Funding Limited, to supply 35,000 barrels of crude oil per day for the settlement of the $1.036 billion (N426.2 billion) funding already received for the financing of the investment in Dangote refinery.

“The interest rate for the facility is a three-month LIBOR plus 6.125 per cent. The arrangement has been scheduled to commence on August 30, 2023. Project Bison has been transferred to NNPC Limited.”

In addition to this $35,000 forward sale, the NNPC has a $3.3 billion debt-for-oil finance contract with Afreximbank for 90,000 bpd of oil.

To finalise the $2.76 billion transaction for the 20% interest, the NNPC agreed to grant Dangote Refinery a $2.5/bbl discount on the official selling price per barrel for 300,000 barrels per day, as well as 100% of the NNPC's portion of any dividend declared by the refinery throughout the repayment period.

The statement reads: “In September 2021, the NNPC acquired a 20 per cent interest in Dangote Petroleum Refinery and Petrochemicals Free Zone Enterprise (DPRP FZE) worth $2.76 billion. This investment is held by NNPC Greenfield (a special-purpose vehicle that is 100 per cent owned by NNPC) in trust for NNPC.

“This acquisition was financed by $1.036 billion in funding, of which $1 billion was paid to Dangote Refinery and $36 million was accounted for transaction costs.

“The balance of the cost of equity investments made in DPRP FZE, which is $1.76 billion, will be paid upon completion of the refinery project starting April 1, 2023 or any other date agreed between the parties (the NNPC and Dangote Oil Refining Company Limited) via a combination of a $2.5/bbl discount on the official selling price per barrel on 300,000 barrels per day to DPRP FZE, and 100 per cent of NNPC’s portion of any dividend declared by DPRP FZE throughout the repayment period.”

Between 2021 and 2022, the Nigerian National Petroleum Company Limited (NNPCL) generated N6.42 trillion in revenue, a 37.2% increase.

Also, the business reported Profit After Tax (PAT) of N2.52 trillion, which is around 274% more than the N674 billion from 2021.

The NNPC has total non-current assets of N37 trillion and total current assets of N21.59 trillion, totalling N58.65 trillion, according to the audited statement for 2022. By comparison, it represented a gain of almost 260.47% over N16.27 trillion in 2021.

Furthermore, as of the end of 2022, the entire amount of liabilities was N49.35 trillion, with non-current liabilities amounting to N19.98 trillion and current obligations totalling N29.3 trillion.

This indicates a about 266.6% rise from the year prior, as N13.46 trillion was recorded in 2021.

Furthermore, during the year, deferred tax assets were N3.098 trillion, while deferred tax liabilities were N13.23 trillion. From N5.34 trillion in 2021 to N6.7 trillion in 2022, the cost of sales increased by 25.47%.

The financial statement shows that NNPC has made improvements over the years, particularly in terms of profit. The NNPCL reported a loss of N803 billion in 2018, but the business decreased the deficit to N1.7 billion in 2019.

With the first-ever profit of N287 billion in its history in 2020, the NNPCL has turned the corner. To N674.1 billion by 2021, the profit shot up.

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