On Tuesday 23 January 2024, Nigeria’s Extractive Industries Transparency Initiative (EITI) raised concerns about the Nigerian National Petroleum Company’s (NNPC) 20% stake in the Dangote Petroleum refinery. Regarding the clauses of the contract, the EITI states that many questions remain unanswered, particularly in relation to loans secured by crude oil.
In August 2021, NNPC, with the approval of former President Muhammadu Buhari, acquired a 20% stake in the Dangote refinery for 2.76 billion dollars.
NNPC is expected to supply 300,000 barrels of crude oil a day to the refinery, while obtaining a 3.3 billion dollar loan from Afrexim Bank, to be repaid with crude oil.
But the EITI, through the voice of its technical director Alex Gordy, said that the terms of the contract concerning this 20% stake remained unclear. Gordy said that the public deserved to know the various conditions surrounding the contracts, adding that issues relating to interest, repayment, valuation and others needed to be clear.
“At the time of validation, it was clear that NNPC had acquired a 20% stake in the Dangote refinery. However, this was not explained, particularly in the public domain. What were the terms of this purchase? What was the valuation of this 20% stake and how was it supposed to be paid for?” asks the EITI Technical Director.
“We know it was supposed to be paid for by future oil deliveries, but how would it be valued at the market rate and at the different rates of those oil deliveries? Is the refinery made up of deductions from federal government oil revenues or is it NNPC production? A number of questions remain around this particular transaction, but also around the other on-lending of resources”, worries EITI Technical Director Alex Gordy.
He said the fundamental objective is to inform the public about whether this is a fair deal for the government. “Is the repayment of this loan or the payment of this participation in line with market conditions?” he asks again.
Indeed, in 2019, NNPC joined the EITI as a state-owned company. This decision was intended to make NNPC, which is frequently accused of lacking transparency and accountability, much more open. It should be noted that in December 2023, Nigeria completed the EITI assessment, obtaining an overall score of 72 points out of 100.
Georges YOUL
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