NNPC Not Seeking $2bn Fresh Funds Now – Official

The Nigerian National Petroleum Company (NNPC) Limited has stated that it is not currently seeking a fresh $2 billion oil-for-cash loan deal, contrary to recent reports.

The company in response to LEADERSHIP enquiry said it will make an official announcement when it is ready to proceed with any of the initiatives mentioned.

These comments come after reports suggested that the NNPC was eyeing a new $2 billion oil-for-cash loan deal within the next two months. However, the NNPC management dismissed these claims, emphasising that the company is not actively pursuing any fresh loan facilities at this time.

“When we are ready to proceed with any of the initiatives mentioned, we will make an official announcement. As a global energy company, we need funding to undertake aggressive drilling campaigns, chief corporate communications officer, NNPC Ltd, Olufemi Soneye told LEADERSHIP.

“Naturally, we will require financing for our high capital expenditure projects. Our financing arrangements are typically announced through our financial advisers and arrangers. When the time comes, new financing transactions will be announced to the market,” Soneye said.

Reuters reported that the NNPC is seeking to secure a new $2 billion loan using crude oil pre-payments as collateral, Reuters report.

According to the news agency, NNPC group chief executive officer, Mele Kyari, said 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 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,” Reuters reported.

It is unclear which lender would arrange the loan, as three sources said Afrexim would be unable to extend its exposure to Nigeria that far.

The news agency had last week reported that the NNPC owes around $6 billion to international traders for imported petrol as traders said the state-owned company is taking more days to make payment instead of within 90 days.

According to Reuters, NNPC’s mounting debt, which includes overdue payments exceeding $4 billion-$5 billion for January imports alone as several international petrol suppliers have ceased participating in recent tenders.

All five sources who spoke to Reuters asked not to be named because they were not authorised to speak on the issue.

“It will be a syndication with critical but regular partners who have been in business with our company to forward the cash,” Kyari reportedly told Reuters on Tuesday.

Recall that on August 16, 2023, the Nigerian National Petroleum Company (NNPC) Limited secured a $3.3 billion emergency crude repayment loan — a transaction aimed at supporting the naira and stabilising the foreign exchange (FX) market.

Arranged by the African Export-Import Bank (Afreximbank), the $3.3 billion crude-for-cash loan was also targeted at supporting the federal government’s monetary and fiscal reforms.