Nigerian National Petroleum Company Limited (NNPCL) is in the process of arranging a new $2 billion loan backed by oil, aiming to alleviate the current fuel shortages plaguing the country. This initiative, reported by Reuters recently, indicates NNPCL’s intent to finalize the loan agreement within the next two months.

Mele Kyari, the Group Chief Executive Officer of NNPCL, clarified that the loan is primarily intended to support regular business operations rather than being a reactive measure. He emphasized that the funding will ensure timely gasoline payments and facilitate strategic investments in the company’s infrastructure and operations.

NNPCL plans to secure the loan against a portion of its daily crude oil production, estimated at 30,000-35,000 barrels per day. Kyari mentioned that the loan arrangement will involve syndication with established business partners, although specific financial details were not disclosed at this time.

Concerns have surfaced regarding NNPCL’s mounting debts to petrol suppliers, which reportedly doubled to $6 billion over the past four months. However, NNPC spokesperson Olufemi Soneye refuted these claims, asserting that the financial situation is under control.

In a previous financial move on August 16, 2023, NNPCL successfully secured a $3.3 billion emergency loan for crude oil repayments, aimed at stabilizing Nigeria’s currency and bolstering the foreign exchange market. When combined with the new $2 billion loan, this totals a significant $5.3 billion in oil-backed financing.

The backdrop of this financial maneuver includes challenges faced by entities like Dangote Refinery, which has expressed difficulties in procuring Nigerian crude from International Oil Companies (IOCs). This issue compounds ongoing fuel scarcity affecting major Nigerian cities such as Abuja, Lagos, Kano, Kaduna, and others, contributing to public frustration and economic concerns nationwide.