Alhaji Aliko Dangote, the President of Dangote Group, has announced that the Nigerian National Petroleum Corporation (NNPC) Limited no longer holds a 20% stake in Dangote Refinery. He shared this update during a press briefing at the refinery on Sunday.
According to Dangote, the NNPC only managed to secure a 7.2% stake in the refinery by paying a portion of the required funds. However, the national oil company has not fulfilled its obligations, which were due in June 2024. “NNPC no longer owns 20% stake in the Dangote Refinery. They were meant to pay their balance in June but have yet to fulfill the obligations. Now, they only own a 7.2% stake in the refinery,” Dangote explained.
The initial plan for the NNPC to acquire a significant stake in the refinery dates back to March 2021. At that time, Mustapha Yakubu, the Chief Operating Officer of Refining and Petrochemicals at NNPC, stated that the company intended to raise $2.76 billion to purchase a 20% stake in Dangote Refinery. This move was seen as a strategic effort to ensure Nigeria’s involvement in the massive project and enhance its energy security without compromising the plans to rehabilitate its own refineries.
To achieve this stake, NNPC borrowed $1.3 billion, as indicated in their 2022 audited financial report. Despite these efforts, the NNPC could not meet its financial commitments, leading to a reduced stake of 7.2% in the $19 billion refinery.
In addition to addressing the NNPC’s stake, Dangote shared ambitious future goals for the Dangote Group. The group aims to generate around $30 billion in revenues by 2025. One of their strategic objectives is to become independent of the Central Bank of Nigeria (CBN) for foreign exchange. This will be achieved by becoming the largest supplier of foreign exchange in the FX market.
The Dangote Group is also planning to diversify its revenue sources. Currently, 75% of the group’s revenue comes from its cement business, but the goal is to reduce this to 15% in the future. Furthermore, Dangote aims to balance its earnings before interest, taxes, depreciation, and amortization (EBITDA), shifting from an 80% Nigerian base to 50% foreign-based. This change is expected to result in hard currency revenue accounting for 90% of the group’s total revenue.
These plans underscore Dangote’s vision of transforming his conglomerate into a globally competitive and diversified entity. The focus on increasing foreign exchange earnings and reducing dependence on the Nigerian market aligns with the group’s long-term strategy to sustain growth and profitability.
In summary, Alhaji Aliko Dangote’s recent announcements highlight significant changes and future plans for both the Dangote Refinery and the broader Dangote Group. The reduction in NNPC’s stake from 20% to 7.2% due to unmet financial obligations marks a notable development in the refinery project. Meanwhile, the Dangote Group’s ambitious revenue and diversification goals reflect a strategic approach to securing its position as a key player in the global market.
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