NNPCL eyes new $2b oil-backed loan to boost finances

Mele Kyari

THE Nigerian National Petroleum Company Limited is in talks for a fresh $2bn oil-backed loan to boost its finances and allow investment in its business, the company’s Chief Executive Officer, Mele Kyari, told Reuters during an interview.

According to the online news medium, NNPCL’s debts to Premium Motor Spirit or petrol suppliers have doubled in the last four months to hit $6bn.

This is as the federal government relies on oil exportation by the NNPCL for the bulk of its revenue, and as a source of funding for its capital projects.

However, crude oil production has been affected by crude oil theft, pushing low government revenue.

Also, the cost of gasoline subsidies has further depleted cash reserves.

President Bola Tinubu has been struggling to push through reforms in the country – including eliminating fuel subsidies, and allowing the naira currency to trade close to market levels – without pushing the country’s population to a cost-of-living breaking point.

Kyari confirmed the company wanted a loan against 30,000-35,000 barrels per day of crude production, but declined to say how much money it sought. He said the cash raised would be used for all of the NNPCL’s business activities, including supporting 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 said, adding he expected to conclude the deal in the next two months.