The Nigerian National Petroleum Company (NNPC)Limited is negotiating a new oil-backed loan to improve its financial position and support its business activities.
NNPC’s Chief Executive, Mele Kyari, shared this development with Reuters as the state-backed oil company faces mounting financial pressures.
NNPC, with the Nigerian government as the main stakeholder, aims to secure at least $2 billion, according to sources cited by Reuters.
The company’s debts to gasoline suppliers have doubled in the past four months, reaching $6 billion.
Nigeria relies heavily on oil exports for government finances and foreign exchange reserves. However, pipeline theft, years of underinvestment, and the high costs of gasoline subsidies have severely impacted oil production and cash reserves.
President Bola Tinubu has been working to implement reforms in Nigeria, the largest oil exporter in Africa. These reforms include eliminating fuel subsidies and allowing the naira to trade closer to market levels. However, these measures risk raising the cost of living significantly for the Nigerian population.
Kyari confirmed that NNPC is seeking a loan against 30,000-35,000 barrels per day of crude production but did not specify the loan amount. He emphasized that the funds would support all of NNPC’s business activities, including production growth.
“We have no problem covering our gasoline payments. This is just money for normal business and not a desperate act,” Kyari told Reuters.
“It will be a syndication with critical but regular partners who have been in business with our company to forward the cash,” he added, expecting to finalize the deal within two months.
NNPC already has a $3.3 billion oil-backed loan through Afreximbank. However, according to Reuters’ sources, rising fuel subsidy costs have exacerbated the company’s cash flow issues, and the new loan wouldhelp address these challenges.
It remains unclear which lender will arrange the new loan, as sources indicate that Afreximbank might not extend its exposure to Nigeria further. Some oil trading houses have stopped participating in NNPC’s tenders for gasoline due to overdue bills.
