NNPC eyes fresh $2bn oil-for-cash loan deal as fuel queues worsen in Lagos, Abuja and others

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Nigeria’s state-owned oil company, the Nigerian National Petroleum Company (NNPC), is considering securing a new $2 billion loan using crude oil pre-payments as collateral, according to findings by BusinessDay.

Mele Kyari the group general manager 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.

According to Reuters, Nigeria’s government finances rely on the oil the NNPC exports. Also, oil provides the bulk of crucial foreign exchange reserves.

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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.

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“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.

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Meanwhile, the nation’s fuel shortage appears to have worsened, yesterday, as filling stations ran out of stocks, thus shutting their gates against motorists and other users of the product.

Checks in Lagos showed there were long queues at filling stations with commercial stocks of the product as panic buying continued across the state.

Illegal operators were also seen hawking the product along Ikorodu Road, Maryland and Marina, due mainly to the absence of the Nigerian Midstream and Downstream Regulatory Authority, NMDRA, industry regulator, to enforce complianc

Also in Abuja, petrol supply situation grew worse yesterday as more filling stations ran out of stock while black marketers hiked their price to N1,500 per litre.

It was observed that most petrol stations including outlets owned by major marketers in the central area of the city were shut down.

However, NNPC Retail mega station and NIPCO stations continued to dispense with long queues seen at the stations located in Karu, Airport Road and the Central Business District.

The supply difficulty which the NNPC Limited blamed on logistics challenge and flooding in the coastal areas continued into the sixth day despite assurances from government officials that the challenges were being resolved.

The Minister of State Petroleum Resources (Oil), Senator Heineken Lokpobiri, said that normalcy was being restored.

In a post on his verified social media handle X (formerly Twitter), the Minister wrote: “Dear Nigerians, I understand the frustration many of you are feeling due to the fuel queues in cities such as Abuja. Recent flooding on the trucking route and unavoidable logistical challenges due to weather concerns have temporarily disrupted our distribution chain.

“I assure you that our dedicated team is working round the clock to resolve these issues. We are committed to restoring normal fuel supply as quickly as possible. Thank you for your patience and understanding during this time”.

However, the President General, Trade Union Congress, TUC, and President of Petroleum and Natural Gas Senior Staff Association of Nigeria, PENGASSAN, Festus Osifo, yesterday, urged the federal government to tackle logistics, weather and other issues, currently stalling supply to motorists and other users of the product in all parts of Nigeria.

He stated this during an interview with journalists on the sidelines of the ongoing Petroleum and Natural Gas Senior Staff Association of Nigeria, PENGASSAN, Women Annual Convention, PWAC, on Tuesday in Abuja.

He said: “We will continuously have perennial oil scarcity until we do what is right. There is no silver bullet today that is going to stop the scarcity that will come periodically. About a week ago, if you are driving between Ayele and Auchi, you realize that some people sleep on that road for two days, and the road is completely cut off.

“So if you are bringing the product from Port Harcourt, for example, and coming to Abuja, you need to pass through that road, depending on where you are bringing the product from. So the roads today are bad. If you check different parts of the world, how many countries are using tankers to supply PMS or supply AGO; it is not done. Naturally, what is done is the use of pipelines, and in some cases, they use rails.

“If you go to the Western world, you see some rails that have over 2,000 tanks. Railway lines, whether it is in the rainy season, or dry season, are okay to go. So until we imbibe technology, until we fix our pipelines, until we fix our depots, that are also key. If the depots that we have, if the nooks and crannies of Nigeria today are all working, then we could have had reserve stocks in those depots. So that when our roads are bad, we can get those depots that are closer to the major cities, you have fuel supply. Then when the roads are good, you restock them, and at the end, you go back to business as usual.

“So we must be able to deepen the facilities of oil and gas logistics, if we don’t do that, perennially we will have it. So we must be able to sit down and define our distribution value chain in oil and gas logistics. Until we do that, this problem, we will solve it now, but in the next few months, it will come back.”

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