Report: NNPC borrows $1.5b to pay fuel debt

The Nigerian National Petroleum Corproation has obtained a $1.5 billion syndicated loan to help it pay debts to international fuel traders, a senior banking source with knowledge of the deal said on Monday.

The deal struck at the end of last year is seen as crucial to easing the burden on big commodity traders, who were facing the prospect of painful multi-million dollar write-offs, oil trading sources said.

A defaulted on the loans could have shut the country out of international borrowing windows in addition a  dark parlour on the state of the Nigerian economy.

The loan, provided by several Nigerian and international banks and brokered by Standard Chartered, will be paid back over five and half years. The NNPC has put up 15,000 barrels per day of its oil production as collateral, the source said.

NNPC owes major commodity trading houses, including Glencore and Mercuria, around $3.5bn in unpaid fuel supply bills, according to a report last year commissioned by the Ministry of Petroleum Resources.

A list of creditors published in an oil report earlier this year showed there were 35 firms still owed for fuel.

Trading companies have been battling for months to recoup the money and some have since stopped supplying Nigeria with products. But they have mostly remained in the West African country partly because of huge opportunities in the upstream sector.

The list showed that Glencore was owed $138m; Vitol, $198m; and Trafigura, $53m.

In reality, debts for some individual trading companies are widely thought to be much higher due to exposure via subsidiaries and partner firms.

For example, Bermuda corporate registration documents showed that Calson, owed $115.11m by NNPC, was using Vitol's Geneva address. Similarly, Napoil, owed $75.6m, is a partner of Trafigura, its website showed.

Standard Chartered and the NNPC declined requests for official comment. (Reuters).