NNPC Borrows $1bn to Import Petroleum Products As Crude Theft, Opacity of Operations Takes Toll On Revenue

The Nigerian National Petroleum Corporation Limited (NNPC) has borrowed USD$1 billion to import petroleum products into the country for May and July with the Central Bank of Nigeria (CBN) acting as guarantor of the credit facility being provided by the Africa Export-Import Bank (Afreximbank), THEWILL can report.

The 3-year term loan, which the NNPC and its subsidiary, Duke Oil Incorporated are the beneficiaries, is under the Afreximbank’s Ukraine Crisis Adjustment Trade Financing Programme for Africa (UKAFPA).

As the NNPC Limited and its JV partners struggle to meet the country’s OPEC production quota of 1.826 million barrels per day, bpd, largely due to crude oil theft, attacks on pipelines and maintenance at major fields, THEWILL gathered it has struggled to provide crude oil to companies that won crude swap contracts who are supposed to import petrol, jet fuel and diesel into the country in exchange for crude allocated to them under the Direct Sale, Direct Purchase (DSDP) agreement.

According to sources at the Afreximbank, the NNPC/Duke Oil need dollars to import refined products into the country under the swap deal since the corporation is technically the sole importer of the products on behalf of the Nigerian government, which then subsidises the cost to users under a widely fraudulent and discredited fuel subsidy programme. Duke Oil is one of the beneficiaries of the DSDP deal


The sources added that the NNPC/Duke Oil do not have the dollars to fund the imports because of very low crude production from the country’s oil assets. Nigeria currently manages to produce and export about 1.2 million bpd.

According to multiple sources at the Federal Ministry of Finance and several State Governments, the NNPC has contributed nothing at all into Federal coffers for revenue allocation by the Federation Account Allocation Committee (FAAC). The corporation said it has been deducting from the monies that should be going into that account to cover the cost of petroleum products it imports.

Before its recent financial troubles, the NNPC usually remitted about $3.6bn monthly into its accounts with the CBN, and about USD$98 billion per annum which it achieved around 2015, according to records published by the CBN. But low crude production, large scale theft and significant opacity of NNPC operations has crippled its earnings over time.

According to media reports, an NNPC document on Sunday showed that the corporation remitted $2.7 billion between January and June into its accounts in the Central Bank, but checks by this newspaper revealed the deposits were to their current account to fund their operations and not for use by the federation.

Documents seen by THEWILL showed that the Central Bank will take the hit for the loan should it go bad or unpaid. The loan was remitted in two tranches of $500m, according to the sources at the Afreximbank who did not want to be identified because they are not authorised to speak on the matter. This deal followed an official plea by the NNPC, with support from the Presidency, urging the CBN to assist in guaranteeing the deal, without which, Afreximbank would not approve the loan.

Nigeria largely relies on proceeds from the sale of crude oil to meet the country’s demand for dollars as well as its budgetary obligations. However, with the very low crude output and exit of foreign investors as oil prices collapsed due to the COVID-19 pandemic, the naira has been on a free fall at the black market recently hitting a record N725 – $1 before pulling back to about N700 -$1. But with the rebound in crude prices, foreign investors have not returned largely because of the uncertainties and risks associated with the general elections due to begin in February 2023.

The Central Bank in a statement said it “remained committed to resolving the foreign exchange issues confronting the nation and as such has been working to manage both the demand and supply side challenges.”

Nigeria depends mainly on imports for all its consumptions, which has continued to put pressure on its forex reserves prompting the CBN to introduce multiple forex measures and warn that the country needs to look inward and seek alternatives as one panacea to the problem.

The CBN said demand pressure was huge from manufacturers and persons paying school fees and hospital bills abroad but added that it was seeking means to earn foreign exchange to meet these demands in the wake of poor revenue from crude sales

https://thewillnigeria.com/news/nnpc-borrows-1bn-to-import-petroleum-products-as-crude-theft-opacity-of-operations-takes-toll-on-revenue/
Lalasticlala

Before its recent financial troubles, the NNPC usually remitted about $3.6bn monthly into its accounts with the CBN, and about USD$98 billion per annum which it achieved around 2015, according to records published by the CBN. But low crude production, large scale theft and significant opacity of NNPC operations has crippled its earnings over time.

According to media reports, an NNPC document on Sunday showed that the corporation remitted $2.7 billion between January and June into its accounts in the Central Bank, but checks by this newspaper revealed the deposits were to their current account to fund their operations and not for use by the federation.

No functional refineries! The available ones are moribund yet the overhead costs and TAM are so humongous that it is ripping off a substantial chunk of the recurrent budgets.

Crude oil that is being stolen left, right and centre right under the nose of Buhari as minister of Petroleum and president? Imagine NNPC non-remission of any revenue to the national coffers for use by the three tiers of government.What a country! What a government!

Buhari and APC have finished Nigeria. APC will never smell aso rock come 2023.

Maybe it is high time Nigeria allows the real owners of this oil to control their God given wealth. I understand that large scale oil theft is responsible for low output. If the real owners of this oil are allowed to manage crude oil production and sale they can easily mitigate theft and increase output.

I don't even know if I should condemn oil theft in the niger Delta considering that the money realized from there is used to develop the land of aliens and looted by people who are not indigenous to the land

Emefiele suppose die for jail....

Person wey no qualify to head community bank or Lapo na him be a whole federal reserve bank chief.

What a country...

Kai

According to multiple sources at the Federal Ministry of Finance and several State Governments, the NNPC has contributed nothing at all into Federal coffers for revenue allocation by the Federation Account Allocation Committee (FAAC). The corporation said it has been deducting from the monies that should be going into that account to cover the cost of petroleum products it imports.

Meanwhile they are still paying the subsidy they have repeatedly removed while calling it a fraud. So much corruption going on inside this NNPC. Meanwhile who is the minister of petroleum again?

Day light robbery

Ahhhh ,ancestors, why should this kind of lies come out of hell? What has the gods seen as an offence against Nigerians, oil from where now niger republic?

Racoon:
Meanwhile they are still paying the subsidy they have repeatedly removed while calling it a fraud. So much corruption going on inside this NNPC. Meanwhile who is the minister of petroleum again?

Muhammadu Buhari (Minister of Petroleum Resources) also known as failure in disposing his duty as president of federal republic of Nigeria.

They borrow these monies and steal the country blind. Meanwhile, we are paying the cost of their corruption through the inflation of prices of goods and services.

Buhari is hell bent on burning the Nigerian economy to the ground

Totilopussylick:
Muhammadu Buhari (Minister of Petroleum Resources) also known as failure in disposing his duty as president of federal republic of Nigeria.

The failures of this and are just unparalleled in history.
Buhari is just failure personified.

Everything under Buhari points to fraud and incompetence

I just dey laugh this country.