📰 NNPCL’s N8.07 Trillion Debt and the Cost to Nigeria’s Earnings
The Nigerian National Petroleum Company Limited (NNPCL) is managing an estimated N8.07 trillion in crude-backed loan obligations, a funding model adopted amid fiscal pressure and volatile oil production. These debts, detailed in the 2024 financial statements, are primarily serviced by commitments to deliver crude oil and gas.
🛢️ Total Crude Oil Commitment
- Pledged Volume: NNPCL has pledged 272,500 barrels per day (bpd) of crude for various loan deals totaling $8.86 billion.
- This equates to approximately 8.17 million barrels diverted monthly for debt servicing.
- Major Commitments (213,000 bpd combined):
- Project Gazelle (N3.8tn outstanding): 90,000 bpd (for advance tax/royalty payments).
- Project Yield (N1.4tn drawdown): 67,000 bpd (for Port Harcourt Refinery rehabilitation).
- Project Leopard (N1.3tn outstanding): 35,000 bpd.
- Project Eagle (N1.1tn outstanding): 21,000 bpd.
📉 Financial Impact & Operational Shortfalls
- Plunging Profits: Nigeria’s gross profit from crude and gas sales fell by N824.66 billion in 2024, declining 43.32% to N1.08tn (from N1.90tn in 2023). This missed the government’s budget target by 26.3%.
- Output Shortfall: Despite a 12.62% increase in crude output in 2024 (averaging 1.43 million bpd, up from 1.27 million bpd), production still lagged the 1.78 million bpd budget target.
- Revenue Distortion: Gross profit from crude sales accounted for only about eight per cent of total oil and gas revenue in 2024, indicating a structural shift toward taxes and royalties, and highlighting the diminishing impact of production gains on fiscal inflows.
- NNPCL Remittance Issues: The World Bank reported that NNPCL was remitting only 50% of revenue gains from subsidy removal to the Federation Account, using the rest to offset past arrears.
🗣️ Expert Warnings & Call for Transparency
- Opaque Deals: Oil and gas expert Ademola Adigun linked declining earnings to “opaque crude-for-cash agreements” and “undisclosed loan repayments.” He noted that projects like Gazelle lacked proper public or parliamentary scrutiny.
- Forward Sales: Dr. Muda Yusuf stated that forward-sale deals signed in previous years are “still eating into our current earnings,” urging the government to disclose full details of all crude swap and forward-sale agreements to restore confidence.
- NEITI’s Role: Experts called on the Nigeria Extractive Industries Transparency Initiative (NEITI) to strengthen its audits to fully account for crude volumes used in debt settlements and swap transactions.
https://punchng.com/crude-for-loans-nnpcl-battles-n8-07tn-outstanding-debt/
