By Tosin Olatokunbo
A consortium of banks in Nigeria are currently putting heads together on how to raise funds, totalling $3.9 billion for the Nigeria National Petroleum Corporation, NNPC for the purchase of 20 per cent shares in Dangote Refinery.
The Dangote Refinery is valued at over $19 billion and billed to start production next year.
The magazine has yet to find out the commercial banks involved in the deal, but insiders said on top of it, are tier one banks in the country who are prepared to make huge returns from deal.
The move will ensure the ownership of a fifth of the refinery by the government-run oil firm. Dangote Refinery is one of the largest in the world.
According to the Group Managing Director of NNPC, Mele Kyari, the oil firm has started talking to the bank who will be responsible for the syndication of the loan.
Kyari, a fortnight ago broke the news on the firm’s readiness to own part of the refinery, built by Africa’s richest man Aliko Dangote
Speaking on a television program in Abuja, the NNPC boss dispelled claim that government funds will be used to used to finance the equity
Kyari said “Even for this Dangote Refinery, we are not going to take our (Federal Government) money and buy it. They think we are going to take our money and pay for this refinery.
” We are go to borrow for the cash flow of this business. We know that this business is viable, it will work, and that it will return dividends. It has a cash flow that is sustainable because it is a refinery business.
“In the short term, it will continue to be sustainable. And that is why banks have come up to lend to us so that we can take equity”.
He said discussion with the banks are ongoing on the valuation of the refinery with a view to reach a final decision on the issue.
The NNPC boss said “We are taking 20 per cent equity in the Dangote Refinery. There is a valuation process. This business is very regulated. It is an international business.
“No bank will lend money to you to you buy equity in a business of this scale if you have not followed the basic valuation process.
“The reality is that we have a valuation of this refinery about about $19 billion. I don’t have the exact figure. We haven’t closed on this to answer your question straight”.
He explained that the federal government is aware of the deal, adding that NNPC will be on the board of the Dangote Refinery as a shareholder.
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