Nigeria’s NNPC seeks new $2 billion oil-backed loan to boost finances
Nigeria’s NNPC is negotiating another oil-backed loan to strengthen its finances and enable further investment, according to its chief executive, Mele Kyari.
With increasing pressure on the state-backed oil company, the Nigerian National Petroleum Corporation (NNPC) plans to raise at least $2 billion, two sources familiar with the matter told Reuters.
Nigeria’s government finances heavily depend on the oil exported by NNPC, which is a key source of foreign exchange reserves. However, pipeline theft and years of underinvestment have weakened oil production, while the cost of gasoline subsidies has further drained cash reserves.
NNPC chief Mele Kyari confirmed that the company is seeking a loan backed by 30,000-35,000 barrels per day of crude production but declined to specify the amount. He stated that the funds raised would be used to support all of the NNPC’s business activities, including boosting 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.
NNPC already holds a $3.3 billion oil-backed loan through Afreximbank, which disbursed $925 million to Nigeria’s NNPC in a crude oil-backed loan deal in June.
However, rising fuel subsidy costs have worsened the company’s cash flow issues, according to five sources. The new loan is expected to help NNPC manage these costs.
