EITI Questions NNPC’s 20% Stake in Dangote Refinery
The global Extractive Industry Transparency Initiative (EITI) has raised concerns over the Nigerian National Petroleum Company (NNPC) Limited’s 20 percent share in Dangote Petroleum Refinery, adding that many questions are left unanswered in other crude-backed loans.
In August 2021, NNPC, with the approval of the former President Muhammadu Buhari, acquired a 20 percent stake in Dangote refinery for $2.76 billion.
The NNPC is also expected to supply 300,000 barrels of crude per day to the refinery while taking a loan of $3.3 billion from Afrexim Bank to be paid back with crude.
EITI Technical Director, Alex Gordy, said the terms of the contracts remain elusive.
In 2019, NNPC had joined the EITI supporting company while becoming a member of the EITI’s state-owned enterprise (SOE) transparency network.
The decision was meant to make NNPC, frequently accused of lacking in transparency and accountability, much more open.
Gordy said the public deserves to know the various conditions surrounding the contracts, adding that issues around interest, repayment, valuation and others need to be clear.
Gordy said: “In the validation, what was clear was that NNPC had acquired a 20 percent equity interest in the Dangote refinery. However, it was not explained, especially in the public domain. What were the terms for that purchase? What was the valuation for that 20 percent equity interest in the Dangote refinery? How was it supposed to be paid for?
“We know it was supposed to be paid for in future oil deliveries, but how would that be valued at the market rate and the different rates with those supplies of petroleum? Does the refinery consist of deductions from the federal government’s oil revenues or would it be NNPC’s production? Several questions remain around that particular transaction, but also on the other resource back loans?”
He noted that while there is information in the media expressing concerns of Nigerians on the $3.3 billion Afrexim loan, there are limited answers on the valuation, interest rate and the modalities of the payment.
He noted that the fundamental objective of the disclosure is to inform the public about whether that is a fair deal for the government.
“Is the repayment for that loan or payment for that equity interest in line with prevailing market conditions? Or is there something you have to explain? And there may be rational reasons why we make our terms. But that has yet to be explained in the public domain. And I think just reading the press over the last couple of days, it is a subject of interest in Nigeria,” he stated.
Also speaking during the visit of the delegation to Nigeria, Deputy Executive Director, Bady Balde, said the visit to Nigeria was necessitated by the recent validation of the country even as the body commended efforts being made by the Nigerian Extractive Industry Transparency Initiative (NEITI).
In December 2023, Nigeria completed the final global assessment of EITI, securing an overall score of 72 points out of 100.
“We are really proud of the way this organisation has evolved to its key mandate,” Balde said.
Guardian/Adukwu William
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