The Nigerian National Petroleum Company Limited has been directed by the House of Representatives Special Joint Committee investigating issues in the petroleum sector to suspend what it refers to as leveraging Nigeria’s future crude oil until the completion of the committee’s investigation. The committee, led by Ikenga Ugochinyere, the representative for Ideato South/Ideato North Federal Constituency in Imo State, started looking into questionable practices in the sector last week.
Concerns arose after reports surfaced that NNPCL was considering securing an additional $2bn in crude oil-backed loans from international lenders to bolster its financial standing. Mele Kyari, the Group Chief Executive Officer of NNPC, was reported to have mentioned that discussions were underway with international creditors to secure an oil-backed credit facility.
This decision followed revelations that the national oil company is facing challenges in settling a $6bn debt to international oil traders amidst subsidy removal. In a statement issued by Ugochinyere, it was emphasized that any new loan by NNPCL could hinder the ongoing forensic investigation by the House of Representatives. The statement cautioned that such actions could exacerbate existing issues, impede refinery operations, weaken revenue generation, and lead to wastage of future income.
The statement expressed, “The recent news of President Tinubu’s intervention in supplying crude to local refineries in local currency was well-received by the public. However, reports of plans to mortgage future crude revenue for another loan at a critical time for the nation are concerning. This premature decision contradicts the committee’s work, and we demand a stop to this initiative for the sake of our citizens and the nation’s wealth.”
The committee stressed its role as guardians of the people’s resources and demanded accountability from the state-owned oil company to align with the interests of its shareholders, the Nigerian government, and the populace.
As part of its investigative efforts, the committee is looking into allegations of funds not being remitted to federation accounts and lack of crude supply to local refineries. It urged the oil company to align its actions with the recent directive from the Federal Government aimed at safeguarding local refining operations.
“NNPCL should refrain from pursuing further loans backed by crude oil, as this would jeopardize the recent arrangement for domestic crude supply initiated by the President,” the statement added.
Previously, in August 2023, following fuel subsidy removal and forex market unification, the Federal Government, through NNPCL, secured a $3.3 billion loan from Afrexim bank to enhance market liquidity. Mele Kyari had clarified then that the loan aimed to bolster foreign exchange reserves and address the country’s forex challenges urgently.
The loan was structured to be repaid with crude oil priced at $65 per barrel, with approximately 90,000 barrels allocated for this purpose. The committee strongly advised NNPCL against impeding the House of Representatives’ investigation into crude oil supply through additional loans, highlighting the risk such actions pose to local refineries.