The House of Representatives joint committees investigating issues in the oil sector have ordered the Nigerian National Petroleum Company Limited (NNPCL) to stop plans to borrow more money using crude oil as collateral. This comes as the committee looks into allegations of irregularities in the oil sector, including past sales of crude oil and failure to send revenue to the Federation Account.
The committee raised concerns that NNPCL’s plan to borrow $2 billion would make things worse for the country’s refineries. They said this move would leave refineries without enough crude to process, hurt revenue generation, and waste future oil earnings.
In a statement, the committee criticized NNPCL for potentially mortgaging the nation’s future oil revenue for administrative purposes. They also pointed out that the President had recently approved the sale of crude oil to local refineries in naira, which would boost domestic refining. The committee believes that borrowing more money against crude would undermine these efforts.
NNPCL had already borrowed $3.3 billion in August 2023 to address financial challenges after the removal of fuel subsidies. This loan, to be repaid with crude oil, has raised concerns about the long-term effects on the country’s oil resources.
The committee is urging NNPCL to pause its loan plans and allow the ongoing investigations to proceed without interference.
