The debts profile of Nigerian oil companies to banks has hit $3 billion, heightening the heavy burden on the financial institutions.
Chief Executive Officer (CEO) of Seplat Petroleum Plc – one of the Nigerian firms – Dr. Austin Avuru, who said this last week at the Nigerian Association of Explorationists (NAPE) second Webinar series, titled “The New Normal Post Covid-19 for the Oil and Gas sector in Nigeria,” declared that the poor servicing of the debts is being worsened by the Coronavirus pandemic.
The operators in the Nigerian oil and gas sector are owing banks about $3 billion debts that are yet to be mitigated, he said. According to him, it will be difficult for the banks in Nigeria to look the way of the oil and gas sector in providing credit facilities now and post Covid-19.He cited the dwindling fortune of the oil and gas sector occasioned by glut in the market and the volatile oil price.
“The oil and gas sector is the hardest hit this period” he said. However, the Seplat boss noted that banks can still honour some bankable projects in spite of the current challenges.
For instance, he mentioned that Seplat is receiving a nod from banks for its ongoing project.
According to him out of the $350 million facility expected from banks about $150 million is to come from local banks in Nigeria.
He further pointed out that current realities had shown that oil revenue was trending downwards below 45 per cent as a percentage of total federal revenue for 2020.According to him, this is unlike in the past where revenue from oil accounted for 80 per cent of federal revenue and 92 per cent of foreign exchange.