The Reps instruct NNPC to terminate the alleged crude-for-loan deal. Read about the controversy and the directive’s implications.
The Nigerian National Petroleum Company Limited (NNPC) has been instructed by the House of Representatives Special Joint Committee examining matters in Nigeria’s petroleum industry to halt its proposal of mortgaging future crude oil until the investigation is completed.
Last week, the committee headed by Ikenga Ugochinyere who represents Ideato South/Ideato North Federal Constituency commenced its inquiry into dubious transactions in the sector.
After reports emerged that NNPC plans to secure an extra $2 billion in crude oil-backed loans from global creditors to improve its finances, this directive was issued. The committee stated that Mele Kyari, the CEO of NNPC Group, has expressed his intention to negotiate for this credit facility.
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The committee’s apprehensions arise from the discovery that NNPC has a debt of $6 billion to international oil traders, following the removal of subsidies. Ugochinyere cautioned against obtaining another loan as it would sabotage the ongoing forensic inquiry by the House of Representatives, worsen Nigeria’s financial state and exhaust resources intended for local refineries.
On Wednesday, Ugochinyere underscored that exchanging future crude earnings for another loan would hinder revenue generation and result in the depletion of upcoming resources. He urged NNPC to provide briefings to parliament prior to making any additional financial commitments.
At present, the committee is examining claims of failure to transfer funds to the federation account and inability to supply crude oil for domestic refineries. The members strongly recommended that NNPC abide by the directives issued by Federal Government in order to safeguard local refineries and put a stop on proposals for additional loans secured with crude oil.
According to Ugochinyere, the NNPC’s acquisition of a $3.3 billion loan from Afreximbank in August 2023 was intended specifically for handling forex difficulties and should not be further complicated by more debt.
It is evident from the committee’s standpoint that any additional loans supported by crude oil must undergo careful parliamentary review in order to protect national resources and maintain the viability of local refineries.
