The Dangote Refinery has announced plans to sell a 12.5% stake to raise funds, according to a report by Fitch Ratings. This move comes as the Nigeria National Petroleum Company Limited (NNPC) did not complete its acquisition of a 20% stake in the refinery in 2024.
The refinery, which was recently commissioned, aims to use the proceeds from the stake sale to meet its financial obligations. The global rating agency Fitch disclosed that the sale is part of Dangote Group’s strategy to service its syndicated loan maturing in August 2024. However, Fitch expressed concerns about the group’s ability to meet this obligation.
The NNPC had previously acquired a 7.25% stake in the refinery for $1 billion, with an option to purchase the remaining 12.75% stake by June 2025. Since the NNPC could not finalize this acquisition, the Dangote Group now plans to divest the remaining stake.
Fitch Ratings noted that further delays in meeting funding requirements could lead to financial restructuring or default and result in a rating downgrade for the Dangote Group. The refinery, valued at $20 billion, operated at about 50% capacity in the first half of the year, producing approximately 325,000-375,000 barrels of petroleum products daily.
Despite these challenges, the Dangote Group has been proactive in managing its financial commitments. In June, Aliko Dangote, Chairman of the Dangote Group, announced that the group had repaid a $2.4 billion loan for the refinery.
The refinery has also faced scrutiny from the Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA), which accused it of producing low-quality fuel. However, the refinery’s management refuted these claims, asserting that their products are 80% superior to imported ones and inviting the NMDPRA to test the products.
In addition to these developments, Dangote Industries experienced a significant market capitalization loss of N1.21 trillion in July 2024. The decline affected several companies under the Dangote Group, including Dangote Cement, Dangote Sugar Refinery, and NASCON Allied Industries.
Despite these setbacks, the Dangote Refinery has promised that Premium Motor Spirit (PMS), commonly known as petrol, will be available for purchase in the Nigerian market in August.
