Nigeria NNPC Reveals Reason for Reducing Stake in Dangote Refinery from 20% to 7.2%

NNPC reduces its stake in Dangote Refinery from 20% to 7.2% due to strategic realignment. The decision, communicated months prior, aims to align with NNPC's objectives. The refinery, a key project in Nigeria’s energy sector, began production on January 12. Future impacts remain closely watched.

Nigerian National Petroleum Corporation (NNPC) Limited has revealed the reasons behind its decision to reduce its equity participation in the Dangote Petroleum Refinery from 20% to 7.2%. This announcement was made by NNPC's spokesperson, Femi Soneye, and has significant implications for the future of Nigeria’s energy sector. The Dangote Petroleum Refinery, one of the largest in Africa, has been a critical project in Nigeria’s efforts to boost its refining capacity and reduce dependence on imported petroleum products. In September 2021, NNPC acquired a 20% stake in the refinery for $2.76 billion, aiming to bolster the country’s energy infrastructure.

On Sunday, Aliko Dangote, Africa’s richest person and owner of the refinery, disclosed that NNPC’s stake had been reduced to 7.2% due to the national oil firm’s failure to pay the remaining balance of their share, which was due in June. NNPC's spokesperson, Femi Soneye, confirmed this, stating that the decision to limit equity participation had been made several months ago and communicated to the Dangote Refinery. NNPC periodically evaluates its investment portfolio to ensure alignment with strategic objectives. The decision to cap its equity participation at the paid-up amount is seen as a strategic realignment. This move could impact the refinery's financial structure and operational plans but may also allow NNPC to reallocate resources to other strategic projects.

Industry experts have offered mixed reactions to NNPC’s decision. Some see it as a prudent move to ensure financial stability and strategic focus, while others express concerns about the potential impact on the refinery’s long-term operations. A

NNPC’s decision to reduce its stake in the Dangote Refinery marks a significant shift in Nigeria’s oil industry landscape. While the move aims to align with strategic objectives, its long-term impact on the refinery and the broader energy sector will be closely watched. The development underscores the dynamic nature of strategic investments in the oil industry.