NNPC Moves To Borrow Additional $2 Billion Crude Oil-backed Loan To Boost Operations

By Abiola Olawale

The Nigerian National Petroleum Company Limited (NNPCL) has reportedly initiated steps to seek another $2 billion in crude oil-backed loans from international creditors to boost its financial inflow.

Internal sources who spoke with the press said the NNPC is reportedly aiming to secure the oil-backed loan in a bid to boost its finances and allow investment in the oil and gas sector.

This has also been confirmed by the Group Chief Executive Officer (GCEO) of the NNPCL, Mele Kyari.

Kyari who spoke with the journalists said the oil company is currently discussing the possibilities of approaching international creditors to raise an oil-backed credit facility.

While the GCEO revealed that the oil-backed loan facility would be used for all of NNPC’s business activities, including supporting production growth, he failed to give additional information on the international financial body with which NNPCL is in talks with, or the amount it is planning to raise from the transaction.

He said: “We have no problem covering our gasoline payments. This is just money for normal business and not a desperate act.

“It will be a syndication with critical but regular partners who have been in business with our company to forward the cash.”

Meanwhile, this latest development follows revelations that NNPC is purportedly struggling to pay international oil traders a backlog of $6 billion amid subsidy removal.

This also comes after the NNPCL had previously secured a $3.3 billion oil-backed loan from Afreximbank.

In August 2023, following the removal of fuel subsidy and the unification of the forex market which significantly weakened the naira, the federal government through the NNPCL secured a $3.3 billion loan from Afrexim bank to shore up liquidity in the market.

Sources who spoke with the press said the NNPC’s financial challenges have been exacerbated by increasing fuel subsidy costs.

The sources added that the new $2 billion loan, currently under discussion, is seen as crucial for NNPC to manage and pay off these rising subsidy expenses.