The Nigerian National Petroleum Corporation, NNPC, Ltd., said it has commenced moves to secure about $2 billion oil-backed loan to finance its operations.
According to Reuters, Nigeria’s government finances rely on the oil the NNPC exports. Also, oil provides the bulk of crucial foreign exchange reserves.
However, pipeline theft and years of underinvestment have sapped oil production in recent years. Also, the cost of gasoline subsidies has further depleted cash reserves.
The agency said President Bola Tinubu has been struggling to push through reforms in Africa’s biggest oil exporter. These include 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.
It quoted the NNPC boss, Mele Kyari, as confirming that the company wanted a loan against 30,000-35,000 barrels per day of crude production. But he declined to say how much money it sought.
He said the loan would be used for all of the NNPC’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 syndication with critical but regular partners, who have been in business with our company to forward the cash,” he said.
The NNPC boss added that he expected to conclude the deal in the next two months.
NNPC already has a $3.3 billion oil-backed loan through Afreximbank.
But five sources said the company’s lack of cash had been aggravated by rising fuel subsidy costs. They added that the new loan would help NNPC to pay them.
However, NNPC Ltd, could not be reached for comments on Tuesday.