Nigeria National Petroleum Company Limited (NNPCL), yesterday, said a $3 billion emergency crude oil repayment loan was signed with AfreximBank.

This came at the backdrop of about $8.9 billion crude oil shortfall, following the inability to ramp up production.

According to the firm, the deal, which was signed in Cairo, will ease current pressure on exchange rate.

The company, while signing a commitment letter and term sheet, said the bank would provide immediate disbursement that would enable NNPC Ltd to support the Federal Government in its ongoing fiscal and monetary policy reforms aimed at stabilising the exchange rate market.

Nigeria has been struggling with sustaining its crude oil production. With a reported 113.52 million barrel shortfall in meeting the Organisation of Petroleum Exporting Countries’ (OPEC) output quota, the country recorded a gross loss of about N6.8 trillion ($8.9b) in the first seven months of 2023.

The exact terms, including interest, volume of crude, and repayment plan for the loan was not stated.

While OPEC’s production allocated to Nigeria stands at about 1.742 million barrels per day, figures from the Nigerian Upstream Petroleum Regulatory Commission (NUPRC) showed that output average was about 1.1 million barrels.

In the 2023 budget, the crude oil benchmark was about 1.8 million.

Energy Scholar at the University of Ibadan, Adeola Adenikinju, believed that the approach by NNPCL is laudable but he expressed concern.

According to him, finding leeway for increasing crude oil production would have saved the country from such loans.

“I am worried: the more reason the President should assign the right person to man the petroleum ministry. The Petroleum Industry Act must be urgently revised to streamline institutional framework. The security issue must be dealt with as well as modernisation of pipeline assets in the Niger Delta. We need to assure investors of a safe environment for operations and transparency of processes,” Adenikinju said.

He noted that the International Monetary Fund could support some of the Special Drawing Rights allocation to Nigeria. According to him, other dollar revenue-earning agencies of governments should support the Central Bank of Nigeria to boost the country’s net reserves and help the apex bank to defend the naira and fight off speculators.