NNPCL's Pursuit of New $2 Billion Oil-Backed Loan Raises Concerns Amid Fuel Shortage.

In light of the nation's gasoline shortage, the Nigerian National Petroleum Company Limited (NNPCL) intends to obtain a new $2 billion oil-backed prepayment loan. This aligns with a Tuesday Reuters story suggesting that NNPCL plans to finalize the deal within two months.

Mele Kyari, the Group's Chief Executive Officer, stated that the increased funding would permit investments in the company's operations. Kyari told Reuters, “We have no problem covering our gasoline payments. This is just money for normal business and not a desperate act.”

While Kyari did not disclose the exact amount, he mentioned that the company seeks a fresh loan to offset its daily production of between 30,000 and 35,000 barrels of petroleum. According to Kyari, the agreement is expected to be completed within the next two months and will involve a syndication with key, long-standing partners of NNPCL.

This development follows a report claiming that NNPCL owes $6 billion to petrol suppliers, a figure that has increased over the past four months. However, NNPC spokesperson Olufemi Soneye has denied this allegation.

It is worth recalling that NNPCL obtained an emergency crude repayment credit of $3.3 billion on August 16, 2023, with the intention of bolstering the naira and stabilizing the foreign currency (FX) market. The $3.3 billion crude-for-cash loan, arranged by the African Export-Import Bank (Afreximbank), was intended to support the federal government's monetary and fiscal reforms. The subsequent investigation revealed that the new $5.3 billion crude-for-cash loan includes the current $3.3 billion plus the additional $2 billion.

The Dangote Refinery's concern over its inability to obtain Nigerian crude from international oil companies has contributed to the urgency of this situation. Additionally, fuel shortages that began last week in Abuja, Nasarawa, and Lagos have now spread to Kano, Kaduna, Katsina, and other states, causing significant distress among Nigerians.