THERE are concerns over the Nigerian National Petroleum Company Limited’s (NNPCL) quest for another $2 billion crude-backed loan tranche which could have been sourced from the Nigeria stock market.
Despite transiting to a Limited Liability Company on July 19, 2022, with the signing of the Petroleum Industry Act (PIA), the NNPCL has failed to enlist in Nigeria’s capital market
Nigeria currently struggles to meet up with the Organisation of Petroleum Producing Company of Nigeria (OPEC) quota of 1.7 million dollars per barrel production, with energy experts insisting that earlier crude-loan-backed swap deals are partly responsible, in addition to crude oil theft.
While domestic crude oil refiners are raising concerns over a lack of feedstock as some rely on imports as seen with the Dangote refinery, Reuters reports confirmed that the NNPCL has approached international creditors to enhance NNPC financial inflow.
The group chief executive Officer of NNPCL, Mele Kyari, informed Reuters that the national oil company is discussing with international creditors to raise an oil-backed credit facility.
He, however, did not disclose the international financial body involved in the talks, nor the exact amount planned to be raised.
“We have no problem covering our gasoline payments. This is just money for normal business and not a desperate act,” he stated.
Industry analysts believe that the NNPCL could have raised the money from the capital market if it had gone ahead with the initial public offer as prescribed in the Petroleum Industry Act.
“We have lots of lessons bro learn from Saudi Aramco and the model they have adopted in growing their oil sector and not always doing crude-based swaps. For instance, if they are running the right model and listed in the capital market, there’s no need to take the option of a resources-backed loan to get 2 billion dollars, “a social critique and Lecturer at the Faculty of Law in Baze University, Sam Amadi told The ICIR.
Notably, the ICIR had earlier reported that the NNPCL had resorted to resource-backed loans and had sealed a deal of a $3.3 billion loan swapped with crude oil.
The swap deal will see the NNPCL pay back 900,000 barrels of crude per day, totaling 164.25 million barrels of crude oil.
The 2024, budget had projected a daily oil production of 1.78 million barrels but Nigeria recorded a cumulative shortfall of 88.2 million barrels in the first half of the year.
This shortfall alone stands at $7.2 billion, a figure which is about $2 billion higher than the total crude back loan if the country had improved its production.
This resource-backed swap deal has huge implications as several upcoming refineries would have to source their crude elsewhere.
Findings by The ICIR have shown that Dangote resorted to buying his feedstocks from the United States of America, despite the NNPC owning a 20 per cent share in his company, as they were unable to supply him crude.
Energy analysts told The ICIR that the NNPCL in the long run won’t be able to supply crude to upcoming refineries if they maintain crude-swap agreements.
“I am not a fan of resource-backed loans, and this forward sales agreement that is akin to the financialisation of the future oil and gas assets is an anomaly in statecraft that the National Assembly should tight with all rigour,” a development economist, and the co-founder of Dairy Hills. Kelvin Emmanuel told The ICIR.
Despite the NNPC quest for resource -backed loans ,fuel queues have continued to linger in major cities across the country, with Nigerians wondering the end in sight to the development, with the National oil company citing logistics concerns in its distribution channel.
Harrison Edeh is a journalist with the International Centre for Investigative Reporting, always determined to drive advocacy for good governance through holding public officials and businesses accountable.