The House of Representatives Special Joint Committee investigating impediments in the petroleum sector has directed the Nigerian National Petroleum Company Limited (NNPCL) to cease any plans to mortgage Nigeria’s future crude oil until its ongoing investigation is concluded.
The committee, led by Ikenga Ugochinyere, the representative for Ideato South/Ideato North Federal Constituency, Imo State, initiated its inquiry into questionable dealings within the sector last week.
This directive comes in response to reports that NNPCL is planning to secure an additional $2 billion in crude oil-backed loans from international creditors to boost its financial inflow.
According to the panel, NNPC Group Chief Executive Officer Mele Kyari indicated that the national oil company is in talks with international creditors to raise an oil-backed credit facility. This development follows recent findings that the NNPC is struggling to pay a backlog of $6 billion to international oil traders amid subsidy removal.
In a statement issued on Wednesday, Ugochinyere urged NNPCL not to undermine the House of Representatives’ forensic investigation by taking on additional loans.
“This move, if permitted, will exacerbate the current situation, deprive refineries of feedstock, weaken revenue generation, and squander future revenue,” the statement read. “The public was optimistic about President Tinubu’s intervention for crude supply to local refineries in naira. The committee has received intelligence of plans to mortgage future crude revenue for another loan at a time the nation is struggling.”
The statement continued, “This preempts the committee’s work, and we announce the halt of this new move. The revenue being mortgaged belongs to the people, and parliament has a duty to act as the watchdog of the commonwealth. The NNPCL, owned by the Federal Government and Nigerians, must not act against the shareholders’ interests, whom we represent.”
Ugochinyere emphasized the committee’s responsibility to act in the best interest of the citizens and protect the downstream and midstream sectors. The ongoing investigation is probing allegations of non-remittance to federation accounts and the non-availability of crude to domestic refineries.
The panel warned NNPCL not to contravene the recent directive of the Federal Government to protect local refineries.
The statement added, “We urge NNPCL to halt plans for further crude oil-backed loans, as this move will sabotage the President’s deal for domestic crude supply.”
In August 2023, following the removal of the fuel subsidy and the unification of the forex market, which significantly weakened the naira, the Federal Government secured a $3.3 billion loan from Afrexim Bank through NNPCL to shore up market liquidity. Kyari had explained that the loan was intended to bolster foreign exchange reserves and address the country’s FX challenges. The loan is to be repaid with crude oil priced at $65 per barrel, with approximately 90,000 barrels earmarked for the process.
The committee cautioned NNPCL against undermining the House of Representatives’ forensic investigation into crude oil supply with another fresh loan, viewing the move as a threat to local refineries.
