Nigeria’s House of Representatives has ordered the state-owned oil company, NNPCL, to halt plans to use future crude oil as collateral for new loans until a parliamentary investigation is completed. The probe, led by the Special Joint Committee on Downstream and Midstream Petroleum Resources, aims to address longstanding issues in the oil sector, including questionable sales of crude oil, fuel subsidy fraud, and mismanagement.
The committee’s directive comes as NNPCL seeks to borrow an additional $2 billion from foreign lenders, using crude oil as security. Committee Chair Hon. Ikenga Imo Ugochinyere warned that this move could compromise the investigation and hinder President Bola Tinubu’s initiatives to secure crude oil supply for domestic refineries.
The statement read in part.: “We gathered you here today on a shocking development and alleged move by the leadership of the Nigerian National Petroleum Company Limited (NNPCL) to mortgage once again our future crude oil assets and revenues for alleged mere administrative purposes . As the Chairmen of the joint investigative Committees on Petroleum Resources Midstream and Downstream it’s our duty to act in the best interest of the citizens and ensure that the downstream and midstream sectors are protected from any decision that will further worsen the problems currently bedeviling the sectors.
READ ALSO: Tinubu Directs NNPC Ltd To Sell Crude To Dangote, Other Refineries In Naira
“This move, if allowed, will destroy things, starve the refineries, waste future revenue. We have ongoing investigation into past forward sales and allegation of non remittance to Federation account and non availability of crude to domestic refinery and now the citizens were excited on the recent news of president Tinubu intervention for crude supply to local refinery in naira and the committee has received intel of plans to mortgage future crude revenue and oil for another loan at a time the nation is struggling. This is preemptive of the committee work and the Committee wants to announce its halt of this fresh move and for the state oil company to briefly the parliament. The revenue been mortgage are sovereign wealth of the people and the parliament have a duty as the watch dog of the common wealth to step in. The NNPCL today is owned by FG and Nigerians hindered percent hence it’s actions must not hurt their shareholders who we lawmakers represent.
“The Group Chief Executive Officer of the NNPC, reportedly stated that the national oil company is in discussions with international creditors to raise an oil-backed credit facility. This follows the recent revelation that the national oil company is struggling to pay international oil traders a backlog of $6 billion amid subsidy removal. We are calling on NNPCL to halt further plans borrow more loan with crude oil, as the move will sabotage the President’s deal for domestic crude supply. In August 2023, following the removal of fuel subsidy and the unification of the forex market which significantly weakened the naira, the federal government through the NNPCL secured a $3.3 billion loan from Afrexim bank to shore up liquidity in the market.
“Kyari had explained then that the loan would be used to shore up the foreign exchange reserve and provides a more urgent solution to the country’s FX challenges. The loan is said to be paid with crude oil set a $65 per barrel and had earmarked around 90,000 barrels of crude oil for the process. We are urging the NNPCL not to undermine the forensic investigation by the House of Representatives (the People’s Parliament) into crude oil supply with another fresh loan, as move is a threat to local refinery.
READ ALSO: Tinubu Directs NNPC Ltd To Sell Crude To Dangote, Other Refineries In Naira
“On Monday, the Federal Executive Council (FEC) at its meeting presided over by President Bola Tinubu gave express approval of the sale of crude oil to indigenous refineries including the Dangote Refinery in Naira. The Chairman, Federal Inland Revenue Service (FIRS), Zach Adedeji said Tinubu had directed the NNPC to ensure it was done with immediate effect. Adedeji stressed that the memo by the president when implemented will promote the sale of crude oil within local refineries and NNPC to deal in local currency. So it’s surprising to us that despite the President’s directive, the NNPCL is borrowing again, instead of doing the needful.”
The lawmakers are scrutinizing the impact of previous crude oil sales, alleged revenue diversion, and unfavorable contract terms. They argue that allowing NNPCL to secure further loans would exacerbate the problems, deprive refineries of essential feedstock, reduce government revenue, and increase the risk of revenue leakage.
