WHO LIED? We didn’t borrow $1.5 billion to pay debt – NNPC GMD

Published:15 Jan, 2013

NNPC GMDThe Nigerian National Petroleum Corporation has denied obtaining a $1.5bn syndicated loan to help it pay its debts to international oil traders.

Responding to questions from journalists on Monday in Lagos, the Group Managing Director, NNPC, Mr. Andrew Yakubu, said the corporation never borrowed such money.

He said, “NNPC is not borrowing; we are only using our resources to offset long-lasting debts. It is part of normal debt settlement, using our resources. We are open to discussions. Some arrangements have been put in place to resolve the issue through the current intervention that we are about to embark on.

“It (borrowing) is not healthy for our nation; it is not healthy for our economy.”

According to him, discussions are ongoing and a lot of meetings have been held with all stakeholders, including creditors, on the issue.

Yakubu, however, admitted that there had been a lot of indebtedness in the NNPC, which was beginning to affect its credit rating.

Reuters had quoted oil trading sources as saying last week that the loan deal was struck at the end of last year and was seen as crucial to easing the burden on big commodity traders facing the prospect of painful multi-million dollar write-offs.

Had Nigeria defaulted on the loans, it could have restricted its future borrowing capacity and would have worried credit agencies like Fitch and Standard & Poor’s, which recently upgraded the country, the agency reported.

The loan, provided by several Nigerian and international banks, and brokered by Standard Chartered, according to Reuters, will be paid back over five and half years.

The NNPC had put up 15,000 barrels per day of its oil production as collateral, a banking source had reportedly told Reuters.

Standard Chartered and NNPC had declined requests for official comments, according to the agency.

NNPC owes major commodity trading houses, including Glencore and Mercuria, around $3.5bn in unpaid fuel supply bills, according to a report commissioned last year by the Ministry of Petroleum Resources.

The country is among the world’s top 10 crude oil exporters but has insufficient refining capacity to meet its domestic fuel needs and is heavily reliant on imports, on which it pays costly subsidies to keep a lid on retail petrol prices.

 

via Punch

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