Our Correspondent | Energy
Fresh concerns have emerged over transparency in Nigeria’s oil revenue management as new disclosures show that the Nigerian National Petroleum Company Limited (NNPCL) is battling ₦8.07 trillion in crude-backed loan obligations — commitments analysts warn are eroding public earnings and locking in a significant share of national oil production.
An analysis of NNPCL’s 2024 financial statements reveals that several forward-sale and pre-export financing arrangements now dominate the company’s funding structure, with repayments depending on large volumes of crude and gas deliveries over multiple years.
Industry experts say the rising debt and the opaque nature of the arrangements are deepening long-standing concerns about how much of Nigeria’s crude is already committed to creditors.
A Tangle of Crude-Backed Loans
Among the company’s biggest exposures is the Eagle Export Funding deal, where the outstanding balance stood at ₦1.1 trillion at the end of 2024. Although earlier tranches of the facility were repaid, a $900m tranche secured in 2023 and backed by 21,000 barrels per day (bpd) still remains.
NNPCL’s disclosures show Eagle requires “at least 1.8 million barrels” to be delivered per cycle — a commitment analysts describe as sizeable.
Economic governance expert Ademola Adigun said the facility typifies the transparency challenges in Nigeria’s oil-backed borrowing.
“Some of Nigeria’s crude has been committed ahead of time, but the full picture is not available to the public, not even to key institutions,” he told the Punch. “That gap in disclosure is part of the reason revenue outcomes continue to shock everyone.”
Refinery, Gas-Supply Loans Add to Debt Burden
The company also owes heavily under refinery-rehabilitation financing, including Project Yield — a ₦1.5 trillion facility backing the Port Harcourt Refinery upgrade, of which ₦1.4 trillion has been drawn. The loan is secured against 67,000 bpd of crude-equivalent refined products, and repayment begins in June 2025.
A separate arrangement, Project Leopard, carries a ₦1.3 trillion outstanding balance and is backed by 35,000 bpd.
NNPCL’s agreement with Nigeria LNG Limited (NLNG) adds another layer, with ₦472 billion outstanding under an incremental gas-supply financing deal.
Project Gazelle: Heaviest Transparency Red Flag
By far the largest liability is Project Gazelle, a crude-for-cash arrangement used to settle tax and royalty obligations on Production Sharing Contract assets.
By December 2024:
- ₦4.9 trillion had been drawn from the facility,
- only ₦991 billion worth of crude had been delivered,
- leaving ₦3.8 trillion outstanding,
- backed by 90,000 bpd.
Development economist Dr Aliyu Ilias said Gazelle and similar deals have made it harder to assess the true fiscal position of the country.
“Nigeria’s crude trading has become so layered — swaps, pre-financing, forward sales — that it is difficult to know how much crude is actually available for the Federation Account at any point in time,” he told the Punch. “This uncertainty is itself a revenue risk.”
Over 213,000 Barrels Per Day Already Committed
Across the major facilities — Eagle, Yield, Leopard and Gazelle — NNPCL is obligated to deliver 213,000 barrels per day, excluding gas commitments.
Experts say this volume represents a significant chunk of Nigeria’s daily production, especially given that output averaged 1.43 million bpd in 2024, well below the 1.78 million bpd budget target.
Adigun warned that the commitments are already shrinking fiscal inflows.
“Crude that should generate new income is being used to service old debts. That is why recorded production and actual revenue are no longer moving together.”
Revenue Weakness Exposes Debt Pressures
Despite a 12.6% rise in crude output in 2024, gross profit from oil and gas sales plunged by ₦824.66 billion, falling to ₦1.08 trillion — a 43% drop from 2023.
Analysts link the poor performance partly to the heavy forward-sale obligations.
Economic analyst Dr Muda Yusuf told The Punch that the mismatch between production and earnings reflects years of crude-backed borrowing.
“During the Emefiele years, Nigeria committed a lot of its crude up front, and those barrels are still being deducted now,” he said. “The practice distorted the relationship between what we produce and what we earn.”
World Bank Flags Under-Remittance
The World Bank recently highlighted further transparency concerns, revealing that NNPCL remitted only ₦600 billion out of ₦1.1 trillion realised from crude sales and related income in 2024.
According to the Bank, the company retained about half of the proceeds to settle arrears tied to past subsidies and other obligations.
Calls for Full Disclosure of Crude-Backed Deals
Yusuf acknowledged that reforms under the current NNPCL management have improved professionalism but said more must be done.
“There is progress, but Nigerians still do not have complete visibility over the crude swap deals, forward sales and off-balance-sheet transactions,” he said. “Publishing these details is essential if confidence in oil-revenue reporting is to be restored.”
Analysts say Nigeria risks continued revenue instability unless the government and NNPCL establish a transparent registry of all crude-for-loan contracts and align them with national production plans.