According to the online news medium, NNPCL’s debts to Premium Motor Spirit or petrol suppliers have doubled in the last four months to hit $6bn.

This is as the federal government relies on oil exportation by the NNPCL for the bulk of its revenue, and as a source of funding for its capital projects.

However, crude oil production has been affected by crude oil theft, pushing low government revenue.

Also, the cost of gasoline subsidies has further depleted cash reserves.

President Bola Tinubu has been struggling to push through reforms in the country – including eliminating fuel subsidies, and allowing the naira currency to trade close to market levels – without pushing the country’s population to a cost-of-living breaking point.

Kyari confirmed the company wanted a loan against 30,000-35,000 barrels per day of crude production, but declined to say how much money it sought. He said the cash raised would be used for all of the NNPCL’s business activities, including supporting production growth.

“We have no problem covering our gasoline payments. This is just money for normal business and not a desperate act,” Kyari told Reuters.

“It will be a syndication with critical but regular partners who have been in business with our company to forward the cash,” he said, adding he expected to conclude the deal in the next two months.

NNPCL already has a $3.3bn oil-backed loan through Afreximbank, but five sources said the company’s lack of cash had been aggravated by rising fuel subsidy costs, and that the new loan would help it to pay them.

It is unclear which lender would arrange the loan, as three sources said Afrexim would be unable to extend its exposure to Nigeria that far. All five sources who spoke to Reuters asked not to be named because they were not authorised to speak on the issue.

Some oil trading houses have already stopped participating in NNPCL’s tenders for gasoline because the overdue bills, have pushed their exposure to Nigeria above the levels their companies allow.

Tinubu announced the removal of costly fuel subsidies shortly after he took office last year, allowing pump prices to triple. Subsidies – which critics say are an inefficient tool that benefits mainly elite, city-dwelling car owners – have been a drain on the country’s finances for years.

However, given the pain of double-digit inflation, NNPCL capped average fuel prices at just above 600 naira per litre a year ago – a price that has become further from market levels since the naira fell and global oil prices rose.

Fuel queues began forming last week in Lagos as Abuja petrol marketers stopped selling.

Reports said the ex-depot price in Lagos is above ₦700 per litre, meaning stations would lose money if they sold at the capped prices.

The 650,000 barrel-per-day Dangote refinery on the outskirts of Lagos is expected to begin petrol production in the coming weeks.

However, the refinery has loans – and crude oil feedstock costs – in U.S. dollars, and would be reluctant to sell at a loss inside the country – or wait months for payments from the NNPCL.

The sources told Reuters that the pressure has mounted on the government to increase pump prices – but leaders, mindful of deadly riots in Kenya that forced the government to backtrack on plans to increase taxes, are expected to be cautious about doing so.

REUTERS/Channels Television