September 18, 2021

NNPC’s $2.7bn Stake Acquisition In Dangote Refinery; Another Kyari’s Milestones

3 min read

On Wednesday, 4th August, 2021, the Federal Government gave approval to the Nigerian National Petroleum Corporation (NNPC) to acquire a 20% stake in the Dangote refinery for $2.76bn.

Minority have spoken against the equity but Nigerians should know that there are a number of realities like transportation, power and other things that petroleum adds to Nations and populations. These are real and you can’t avoid it and of course for a resource-dependent country, Nigeria is blessed with over 37billion barrels reserves of crude oil and over 203TCF of Gas.

Nigeria is a net importer of petrol and that throws in enormous energy supply security issues for the country, so three years ago, the NNPC under the Management of Mal. Mele Kolo Kyari decided to expand its portfolio.

“It’s not today. We didn’t start thinking about Dangote refinery yesterday. We decided that we cannot depend on the refineries that’s owned solely by us. We needed to spread the ownership of the refineries in such a way that at any point in time , we will guarantee supply of for our country and have multiple sources of supply, Mal Mele Kolo Kyari said on an interview with Arise TV in July.

As at today, the Nigeria National Petroleum Corporation has equity in Ammonia plants, Methanol plants, Fertiliser plants. This is to enable the Corporation spread its risks and portfolio.

The NNPC believes that taking equity in any refinery that is producing more than 50,000 barrels is the right thing to do. The reason is that you do not allow entities of this nature in a country like ours that relies on revenues and resources from petroleum for its wellbeing to allow the private sector only to have that control. No country does that.

It is the policy of government any where in the World that organization like the NNPC take interest in a refinery like that of Dangote.

The 20 percent equity shares is been bought on behalf of the Federal Government

Expected to come online in January 2022, the 650,000 barrels per day (bpd) refinery is currently under construction in Lagos. Upon completion, it is anticipated to become Africa’s biggest oil refinery.

The refinery is being developed by Dangote Oil Refinery with an estimated investment of $19bn.

Located on a 2,635ha site on the Lekki Free Zone near the Lekki Lagoon, along the coast of Atlantic Ocean, the Dangote refinery is expected to produce up to 50million litres of petrol and 15million litres of diesel a day.

Another milestone is the Warri and Kaduna Refinery modernization.

The Minister of State for Petroleum Resources Timipre Sylva stated that the Federal Executive Council has also approved contracts to modernize two refineries; Warri and Kaduna.

The rehabilitation of Warri and Kaduna Refineries us at the combined total sum of $1.5billion; $897.67million for Warri Refinery and $586.9million for Kaduna Refinery.

The rehabilitation of the Warri and Kaduna refineries is expected to be carried out in three phases. The first phase work will be spread over a period of 21 months, while the second phase will be completed in 23 months.

The final phase work to upgrade the refineries is expected to take 33 months.

The good news about the Port Harcourt Refinery is that work has already commenced; already the first 15 percent of the contract sum has been paid to the contractor and contractor has fully mobilized to site.

Mal Mele Kolo Kyari is truly a round peg in the round hole of the Nigeria National Petroleum Corporation.

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