The Nigerian National Petroleum Corporation (NNPC) seeks to raise funds worth $1 billion to revamp its refinery at Port Harcourt through a prepayment deal, media reports said.
It is reported that if the financing is successful then it will mark Nigeria’s second oil-backed financing since the outbreak of the pandemic and it will cut its hefty fuel import bill. The pandemic has made it difficult for the refiners to find investors as fuel demand dip due to lockdowns and cleantech energy is gaining popularity over fossil fuels.
It is reported that, while the financing is expected to be led by Afreximbank.
One of the spokespersons of the bank told the media, “Afreximbank is looking into a facility for the refurbishment of the Port Harcourt Refinery. However, the borrower is yet to be determined. The discussions were taking place with some foreign and Nigerian trading houses, including some who have previously worked with Nigeria.”
The appetite of foreign banks for exposure to commodity trade finance have dropped since the investor preference for carbon-free energy, defaults and fraud in commodity trading have surged.
The federal government earlier, planned to remove subsidies. However, NNPC remain the top petroleum importer, using some 300,000 barrels per day of oil to swap for fuel.
It is believed that Nigeria has four refineries with a combined capacity of 445,000 barrels per day. The refineries are located in places such as Kaduna, Niger Delta.
The pandemic has walloped global refiners and has compelled many to shut operations.