…Says FG gets only 320,000bpd from 1.4m output
Successive administrations have mortgaged the country’s crude oil reserves to secure foreign loans, thereby plaguing Nigeria’s economy, according to a published investigative report.
The investigation revealed how past administrations’ penchant for taking foreign loans backed by natural resources, especially crude oil, was identified as the major cause of Nigeria’s present revenue crisis.
It showed hiw for close to twenty years, administration after administration, working hand in hand with the management of the Nigerian National Petroleum Corporation Limited (NNPCL), had resorted to taking loans backed by future crude oil productions to balance their annual budgets, BH gathered.
According to the investigation, sources in the Finance Ministry, and Petroleum Resources, a large chunk of the monthly revenue flowing into the country from oil sales have been going into the off-shore accounts of lending institutions and commodity traders, who had facilitated the loans for the administrations or supplied refined petroleum products to the defunct NNPC in exchange for crude oil.
As as result of this, the nation is in a dire financial situation, despite oil production climbing to 1.4 million barrels daily on average in June 2024.
This has forced administrations, especially, the current one, to resort to aggressive revenue drive like taxing manufacturers, corporate and religious bodies, as well as citizens.
The depth investigation unearthed multiple crude for refined products swap deals and crude-backed loans dating back to early 2000s.
It said for nearly two decades, each government, in collaboration with the Nigerian National Petroleum Corporation Limited (NNPCL), has relied on future oil production as collateral to balance annual budgets.
The consequences are dire. Despite daily oil production averaging 1.4 million barrels in June 2024, Nigeria faces a severe financial crunch. A significant portion of oil revenue flows directly into offshore accounts held by lending institutions and commodity traders who facilitated these loans or exchanged refined petroleum products for crude oil.
Two notable deals stand out: In August 2023, NNPC secured a $3.3 billion emergency crude oil repayment loan from the African Export-Import Bank (Afreximbank) to stabilize the naira. Known as “Project Gazelle,” this arrangement involved setting aside 90,000 barrels of crude daily at a lower price benchmark of $65/barrel.
More recently, NNPC announced negotiations for another $2 billion loan to boost its finances. In just eleven months (from August 2023 to July 2024), Nigeria mortgaged 125,000 barrels per day of future crude production in exchange for funds.
Additionally, NNPC continues to engage in crude-for-refined-products swap deals. These arrangements involve exchanging Nigerian crude oil for refined petroleum products through the Direct-Sale Direct-Purchase (DSDP) program. Despite challenges, including late payments and supplier withdrawals, NNPC remains the primary supplier of petrol in Nigeria.
It further reported that NNPC’s debts to petrol suppliers doubled to $6 billion in the last four months. While the company disputes this claim, the situation underscores the risks associated with using oil as collateral.
In essence, Nigeria’s economic fate is intertwined with its oil reserves—a precarious balance between revenue and indebtedness.
