The Nigerian National Petroleum Company Limited (NNPCL) is seeking an additional $2 billion loan to boost its finances, according to reports. This comes on top of the existing $3.3 billion oil-backed loan from Afreximbank, secured in August 2023.
The new loan is intended to support the company’s business activities, including production growth, and manage the increasing fuel subsidy costs. However, the move has raised concerns about the company’s financial struggles and its ability to pay off debts.
NNPC is reportedly owing $6 billion to international oil traders, leading some traders to withdraw their refined products. The company has also struggled to pay for imports, with late payments amounting to between $4 billion and $5 billion.
The Nigerian oil and gas sector, which is the primary revenue source for the federal government, faces significant underinvestment due to oil theft and a hostile economic climate. The country’s crude oil production has also struggled to reach the estimated 2 million barrels per day, hindering its ability to leverage international oil prices and secure sufficient foreign exchange earnings.
The additional loan is seen as crucial for NNPC to manage its financial challenges, but it remains to be seen if it will be enough to address the company’s deep-seated financial issues.