Firm Repays $2.61bn, Owes $6.25bn as Nigeria Loses 264m Crude Barrels to Theft, Others

The Nigerian National Petroleum Company Limited (NNPC) has reaffirmed its commitment to a series of crude-for-loan deals amounting to $8.86 billion, pledging 272,500 barrels per day of crude oil. This arrangement translates to approximately 8.17 million barrels monthly being utilized for various loan agreements. According to an analysis by the Nigeria Extractive Industries Transparency Initiative, NNPC has fully repaid $2.61 billion, representing 29.4% of the total loans, while $6.25 billion remains outstanding.

Out of the total credit facility, only about $6.97 billion has been drawn from seven crude-for-loan agreements. Key projects under these deals include Project Panther, Project Bison, Project Eagle Export Funding, Project Yield, and Project Gazelle. Project Panther, in collaboration with Chevron Nigeria Limited, has secured a $1.4 billion loan, backed by 23,500 barrels per day for debt servicing. Meanwhile, Project Bison aimed at acquiring a stake in the Dangote refinery secured a $1.04 billion loan, of which NNPC has fully repaid the portion linked to its smaller equity stake.

Project Eagle consists of three separate loans; the original loan of $935 million was fully repaid by September 2023. The subsequent loans, amounting to $635 million and $900 million respectively, have differing repayment schedules, with the latter set to begin in June 2024.

Despite these financing arrangements, the Port Harcourt Refining Company has yet to begin fuel production, and there have been multiple delays. Furthermore, Project Gazelle aims to stabilize the foreign exchange market through a $3 billion forward sale agreement, with $2.25 billion already drawn against this facility.

Nigeria’s oil production is facing significant challenges, including a notable decline over the past decade. Reports indicate that in 2022, the country produced only 490.94 million barrels, a steep decline from 798.54 million barrels in 2014. While production improved slightly to 537.57 million barrels in 2023, this still falls short of the country’s peak capacity. Factors such as production deferment due to maintenance issues and rampant oil theft have exacerbated the situation, leading to substantial losses in crude output.

In light of these ongoing challenges, the House of Representatives Special Joint Committee has directed NNPC to cease further crude-for-loan agreements, amid concerns of an impending $6 billion backlog owed to international oil traders. Meanwhile, NNPC’s leadership continues to explore additional loans against future crude production to bolster its finances and facilitate necessary investments.

As Nigeria’s government grapples with the implications of fuel subsidy removals and foreign exchange stabilization efforts, President Bola Tinubu has sought reforms to improve the oil sector while managing the economic impact on the populace. In a recent initiative, NNPC has begun supplying local refineries with crude oil to be purchased in naira, a step aimed at enhancing the domestic market and stabilizing prices.

Written by: Idu sunita

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