The NNPC is looking to secure a $1.5 billion, five-year amortising restructuring syndicated loan from international lenders, bankers close to the deal said.
The deal would mark NNPC’s first internationally syndicated loan, according to Thomson Reuters LPC data.
BNP Paribas , Standard Bank and Standard Chartered have submitted their bids to arrange the loan but mandates have not yet been awarded and NNPC is expected to make a decision imminently, one European banker said.
“We are always looking at alternative funding sources, where we suffer shortfalls because of competing demands. This is a large country with a lot of needs,” Levi Ajuonuma, NNPC spokesman said.
“We have a lot of talks with highly regarded international banks who are looking to be involved in our deep offshore and other projects,” Ajuonuma added.
European banks’ rising dollar funding and liquidity concerns are not expected to hamper the likelihood of NNPC securing the $1.5 billion loan, as African deals are “priced so attractively that they tend to compensate for European banks rising costs,” the European banker added.
In July last year, NNPC denied claims of insolvency, but acknowledged that unpaid government subsidies were putting it under financial strain, adding the company could plan a major financing in January 2011.
More recently, Nigeria’s national assembly ordered NNPC to begin repaying 450 billion naira ($2.8 billion) in debts it owes the federal government.
NNPC has been considering tapping the international loan market for several years, so there is a possibility, especially considering volatile economic market conditions, that the deal may not be completed this year, a second European banker said.
Despite being Africa’s biggest oil and gas producer, Nigeria is reliant on imports to meet its energy needs. Its four refineries are in disrepair, but even at full capacity they would only meet around a quarter of domestic energy demand.
NNPC buys crude oil at the prevailing international market rate but sells petroleum products to local marketers at a discount in order to keep pump prices artificially low. The government is supposed to subsidise the difference.