July 13, 2024

NNPC seeks $2 billion oil-backed loan to enhance production and operations

The Nigerian National Petroleum Company Limited (NNPC) is considering a new loan of at least $2 billion, repayable with 30,000-35,000 barrels of crude oil per day, according to reports.

While NNPC CEO Mele Kyari confirmed the plan, he did not disclose the exact loan amount, which would be secured against crude production.

This move comes as the company faces mounting pressure and financial strain, with its debt to gasoline suppliers surging to $6 billion in just four months, highlighting the urgent need for capital injection to sustain the economy.

Nigeria’s federal government heavily relies on oil exports by NNPC for its finances and foreign exchange reserves.

However, the country’s oil production has been severely impacted by pipeline theft and years of underinvestment, leading to dwindling cash reserves, which have been further depleted by the significant cost of gasoline subsidies.

With the proposed borrowing, Kyari stressed that the cash raised would be used for all of the NNPC’s business activities, including supporting production growth.

Nigeria, Africa’s largest oil producer, imports nearly all of its refined petroleum due to insufficient capacity and poor maintenance of its refineries.

Four state-owned dilapidated refineries with a combined capacity of 4450,000 barrels per day have been shut down for years.

The country is now banking on Aliko Dangote, Africa’s richest man, to begin operation of his 650,000 barrels per day refinery to take care of some local petroleum consumption.

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