NNPC borrows $1.5bn to pay fuel debt

NNPC Headquarter Abuja

 Nigerian National Petroleum Corporation (NNPC) has obtained a $1.5 billion syndicated loan to help it pay debts to international fuel traders, a source revealed yesterday. The deal, struck at the end of last year, is seen as crucial to easing the burden on big commodity traders, who were facing the prospect of painful multi-million dollar write-offs, oil trading sources told Reuters.

The loan, provided by several Nigerian and international banks and brokered by Standard Chartered, will be paid back over five and half years. The NNPC has put up 15,000 barrels per day of its oil production as collateral, the source said. Standard Chartered and the NNPC declined requests for official comment. Nigerian importers and marketers of petroleum products are finding it tough accessing credits offshore, no thanks to allegations of graft leveled against most importers by the government, a situation that also gave rise to the ongoing probe of fuel subsidy disbursement to the marketers.

Most marketers had opted out of the importation business leaving the field for the NNPC, and the state-owned firm is now grappling with filling the huge gap in demand and supply, and the resultant effect is the crisis in supply in most parts of the country. An estimated 30 million litres of petrol is consumed daily in Nigeria. Marketers, who spoke to Daily Sun earlier, said they will not resume importation until all their outstanding arrears from previous imports are cleared under the fuel subsidy repayment scheme.

Total debts to marketers stood at about N200billion. The government had moved to clear some of the debts in order to encourage some marketers resume importation, but Daily Sun learnt there has been a new twist or snag in the off-shore business arena for local players: some creditors are shunning touching any application coming in from local Nigerian importers and marketers. “The scandal created by the fuel subsidy overpayments to some marketers and allegations of theft of huge sums of money in the industry has really damaged the reputation of local importers abroad,” an industry source told News men. “Right now most banks and insurance firms abroad are wary to advance credits to local importers or even sign any document emanating from local firms; and particularly for most of the foreign firms that the probe agencies or the local firms alleged to be corrupt had to write to or make contacts with to seek information, obtain data from or authenticate their deals with them, their reaction to fresh applications is simply not encouraging.

“This treatment is even extended to most of the firms that facilitated the buying of refined products and those that freight, they are also very cautious because of the criminal perception of Nigerian businesses in the global market. The fuel subsidy probe has been blown out of proportion. The correspondence between Nigeria and these foreign creditor agencies has been so high and scary and we are paying for it right now because they are no longer feeling free with us; we have all been projected as criminals, and our international reputation badly dented” added the source who is also a top official of one of the importing companies. Dapo Abiodun, Depot and Petroleum Products Marketers Association (DAPPMA), the umbrella union of the depot owners told journalists recently that the “continued existence of member companies is being gravely threatened” by the debt.