Dangote Refinery seek new investors amid liquidity concerns

Dangote Oil Refining Company (DORC) is set to divest a 12.75 per cent stake in its refinery after the Nigerian National Petroleum Corporation (NNPC) Limited scaled down its acquisition to just 7.2 per cent.

This move, revealed in a Fitch Ratings report on Dangote Industries Limited (DIL), comes amid growing concerns about the conglomerate’s liquidity and debt restructuring.

However, the need for new investors underscores the financial challenges that DIL faces as it seeks to complete and operationalize the refinery.

The Chief Executive Officer (CEO) of Dangote Refinery, Aliko Dangote, said the NNPC Ltd no longer owns a 20 per cent stake in the refinery.

“We originally had an agreement with NNPC for a 20 percent stake, but they didn’t pay the remaining balance last year. We extended the deadline until June 2024, but they decided to keep their stake at 7.2 percent, which they had already paid for. So, NNPC, or the government, now owns just 7.2 percent, not 20 percent,” Dangote explained.

Fitch in its report, highlighted that DIL plans to use the equity divestment to address a significant syndicated loan maturing in August 2024, but noted uncertainties about the timely completion of the divestment.

Fitch noted that the group tends to service its significant syndicated loan maturing in August 2024 from the equity divestment.

The Dangote Refinery, located in Lagos’s Lekki Free Zone, is poised to become Africa’s largest oil refinery, with a capacity of 650,000 barrels per day.

The project promises substantial economic benefits, including the creation of thousands of jobs and the production of millions of litres of fuel daily.