The Nigerian National Petroleum Company (NNPC) Limited’s 20% stake in the Dangote Petroleum Refinery has drawn criticism from the international Extractive Industry Transparency Initiative (EITI) in Abuja yesterday. It also noted that certain issues with other loans backed by crude oil remain unresolved.
With former President Muhammadu Buhari’s consent, NNPC made a swift move in August 2021 and paid $2.76 billion to acquire a 20% share in the Dangote refinery.
In addition, the refinery expects the NNPC to supply 300,000 barrels of petroleum per day while repaying a $3.3 billion debt from Afrexim Bank with crude.
According to Alex Gordy, Technical Director at EITI, the details of the contracts are still unclear.
In 2019, NNPC became a member of the EITI’s state-owned enterprise (SOE) transparency network and joined the EITI supporting company. The aim of the decision was to increase the transparency and accountability of NNPC, which is often accused of lacking in these areas.
Gordy stated that the public should be aware of all the terms associated with the contracts, emphasizing the necessity for clarity on matters pertaining to interest, repayment, valuation, and other related matters.
Gordy stated: “What was obvious during the validation was that NNPC had bought a 20% equity stake in the Dangote refinery. It was not, however, clarified, particularly in the public domain. What conditions applied to that purchase? What was the estimated market value of that 20% equity stake in the Dangote refinery? How was the cost expected to be covered?”
“We understand that it was intended to be covered by subsequent oil deliveries, but how would that be valued at the going rate as well as the various rates with those petroleum supplies? Does the refinery’s funding come from NNPC’s production or from the federal government’s oil revenues? There are still a few unanswered questions concerning both that specific transaction and the other resource-backed loans.”
He pointed out that although the media has reported on Nigerians’ worries regarding the $3.3 billion Afrexim loan, there have been few responses on the loan’s valuation, interest rate, and payment terms.
He pointed out that the public’s education regarding the fairness of the government’s deal is the primary goal of the disclosure.
“Is the loan repayment or equity interest payment made in accordance with the current state of the market? Or do you need to clarify something? Furthermore, we might come up with our own terminology for logical reasons. However, an explanation in the public domain is still pending. And from what I’ve read in the press over the past few days, it seems like a topic that Nigerians are interested in,” he said.
Speaking during the delegation’s visit to Nigeria, Deputy Executive Director Bady Balde also stated that the organization was pleased with the Nigerian Extractive Industry Transparency Initiative’s (NEITI) progress and that the country’s recent validation had made the visit necessary.
Nigeria finished the EITI’s final worldwide evaluation in December 2023 with an overall score of 72 points out of 100.
“We truly take pride in how this organization has developed to fulfill its primary mission,” Balde remarked.
