The Federal Government, yesterday, said no final decision has been taken on the reported plan to obtain a $5 billion oil-backed loan from Saudi Arabia’s Aramco.
The loan which is said to be part of the $21.5 billion borrowing plan submitted to the National Assembly last month by President Bola Tinubu, was not publicly disclosed.
Reuters had reported that negotiations on the facility have been delayed by the low price of oil in the international market.
The government in a statement by the Director, Information and Public Relations, Federal Ministry of Finance, Mohammed Manga, said the government was focused on deploying a variety of options to finance its plans.
The statement reads: “The Federal Government of Nigeria is aware of recent media reports concerning a potential forward sale of crude oil involving the Nigerian National Petroleum Company Limited (NNPC Ltd).
“While market speculation is not uncommon in the context of ongoing economic reforms and transactions, no final decision has been announced by the Government, and commentary suggesting the collapse of any such initiative is unfounded.
“The Government remains focused on deploying a range of innovative, transparent, and fiscally responsible financing strategies to optimise Nigeria’s oil assets, improve external liquidity, and strengthen macroeconomic stability.”
Nigeria has in the past few years obtained about $7 billion loans from Afreximbank ($3.3 billion) and other financial institutions using forward sale of its oil production.
The Aramco deal, if it goes through, would be Nigeria’s largest oil-backed loan to date and Saudi Arabia’s first participation of this scale in the country, although the decline in oil price could shrink the size of the deal, the sources said.
Two of the sources said President Bola Tinubu first broached the loan in November when he met with Saudi Crown Prince Mohammed bin Salman in Riyadh at the Saudi-African Summit.
Brent has fallen about 20 per cent to around $65 per barrel from above $82 in January. A lower oil price means Nigeria could need more barrels to back the loan, but years of under-investment are complicating its ability to meet production goals.
Last month, President Tinubu sought approval for $21.5 billion in foreign borrowing last month to bolster the budget, and the $5 billion oil-backed facility under discussion with Aramco would be part of that, sources said.
The banks involved in the talks that are expected to co-fund part of the loan with creditor Aramco have expressed concerns about oil delivery, which has slowed discussions, sources said.
The report disclosed that Gulf banks and at least one African lender are involved in the deal.
“It’s hard to find anyone to underwrite it,” one source said, citing concerns over the availability of the cargoes.
