Nigerian National Petroleum Corporation, NNPC, Chief Executive, Mele Kyari has told Reuters that his office is in fresh talks for another oil-backed loan to boost its finances and allow investment in its businesses, as pressure mounts on the state-backed oil company the economy depends upon.

The federal government being the main stakeholder in the Nigerian National Petroleum Corporation (NNPC),
the agency aims to raise at least $2 billion, two sources familiar with the situation said.

Its debts to gasoline suppliers have doubled in the last four months to hit $6 billion.

Nigeria’s government has been relying on finances from the oil and the NNPC exports and oil provides the bulk of crucial foreign exchange reserves. However, oil theft, pipeline vandalism over the years and of under investment, have exhausted oil production in recent years, and the cost of gasoline subsidies has further depleted cash reserves.

President Bola Tinubu has been struggling to push through reforms in Africa’s biggest oil exporter – including eliminating fuel subsidies and allowing the naira currency to trade close to market levels – to an extent that is threatening the country’s population to a cost-of-living breaking point.

NNPC chief Mele Kyari confirmed 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.

Speaking to Reuters Kyari said “We have no problem covering our gasoline payments. This is just money for normal business and not a desperate act”.

“It will be 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 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, and that the new loan would help it to pay them.

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