The Nigerian National Petroleum Company Limited (NNPCL) has made significant progress in repaying a $1.036 billion loan used to finance its 20% stake in the Dangote Petroleum Refinery and Petrochemicals Free Zone Enterprise (DPRP FZE). As of December 31, 2023, NNPCL had repaid $625 million of the principal amount, leaving a remaining balance of $424 million.
The loan, secured in September 2021, was obtained through a forward sale agreement with Lekki Refinery Funding Limited. As part of the agreement, NNPCL committed to supplying 35,000 barrels of crude oil per day as a means of repaying the loan. The facility carried an interest rate of 3-month LIBOR plus 6.125%, reflecting the global benchmark for lending in the petroleum sector.
The financial statement details the repayment progress under the section titled “Financing of investment in Dangote Refinery.” As of December 31, 2023, NNPCL had managed to repay 60% of the principal amount, showcasing its financial discipline and commitment to reducing its debt obligations. With $424 million still outstanding, the company continues to make steady progress toward full repayment.
NNPCL’s investment in the Dangote Refinery is seen as a strategic move to bolster Nigeria’s domestic refining capacity. The refinery, once fully operational, is expected to significantly reduce Nigeria’s dependence on imported petroleum products, thereby enhancing energy security and contributing to the country’s economic stability.
The Dangote Refinery, with an expected refining capacity of 650,000 barrels per day, is one of the largest in Africa and is anticipated to meet both local and regional demand for refined petroleum products. NNPCL’s 20% stake in this mega-project underscores the company’s long-term vision to be a key player in the downstream sector of Nigeria’s oil and gas industry.
The repayment of this substantial loan also reflects NNPCL’s broader strategy to maintain a strong balance sheet while investing in critical infrastructure that supports national development goals. The company’s ability to service the loan, despite the complexities of the global oil market and domestic challenges, highlights its resilience and operational efficiency.
In addition to reducing its financial liabilities, NNPCL’s investment in the Dangote Refinery aligns with Nigeria’s broader economic objectives, including job creation, technology transfer, and the development of local content. The refinery is expected to create thousands of jobs during its construction and operational phases, providing a significant boost to the local economy.
Observers in the Sector say NNPCL’s progress in reducing its debt burden while maintaining strategic investments signals a positive outlook for the company and the broader Nigerian economy as the successful execution of this loan agreement and the eventual full repayment will not only strengthen NNPCL’s financial standing but also reinforce its role as a cornerstone of Nigeria’s energy sector.
