Some stakeholders in the oil and gas industry have advised Federal Government to develop well-structured government policies that can effectively revive the country’s economy.
They gave the advice in separate interviews on Friday in Lagos against the backdrop of the recent emergency three billion dollars crude oil repayment loan from AFREXIM Bank.
The Nigerian National Petroleum Corporation (NNPC) Ltd., on Aug. 15 secured a three billion dollars crude repayment loan to support the Naira and stabilise the foreign exchange market.
NNPC said the funding was secured from the African Export-Import (AFREXIM) Bank in Cairo.
Dr Ayodele Oni, Partner, Bloomfield Law Practice, said there was need for well-structured government policies that are aligned with Nigeria’s long-term economic goals.
Oni said these policies should prioritise sectors such as infrastructure development, diversification of the economy, and improvement of the business environment.
According to him, government needs to focus more on creating an enabling environment for sustainable growth, attract foreign investment, and promote job creation.
The expert also emphasised the importance of transparency and accountability in the management of the loan.
He said, “whilst this loan may be a proactive short-term solution to the problems associated with USD unavailability and the collapse of the value of the Naira, the Central Bank of Nigeria (CBN) and government must take a proactive and well-implemented approach toward finding a final, long-term solution.
“This loan facility, in my opinion, may be the right call, depending on how it is structured.
“These are very difficult economic times for the country, and its major source of revenue, petroleum, is suffering considerably.
“Government and NNPCL must, however, be responsible in servicing this loan and take well-planned decisions on how to not only service this loan facility but other loan facilities already running.”
Oni noted that the $3 billion crude oil repayment loan obtained by NNPC presents an opportunity for Nigeria to revamp its economy.
The expert noted that the term sheet signed by NNPCL gives it access to immediate dollars disbursement from the Afreximbank.
According to him, this will be used to provide support to the government’s USD liquidity crises (largely from crude oil sales shortfalls) and fiscal reforms.
He said that the absence of dollars had significantly affected international commerce within a lot of sectors and the petroleum industry not exempted.
Oni said that the downstream sector would be particularly positively impacted, as access to USD by importers of petroleum products would help strengthen the USD over the Naira, and stablise the price of petroleum products in the downstream market.
“This, from all indications, appears to be a better solution to our current crises than going back to the subsidy regime which is not sustainable.
Similarly, Mr Tunji Oyebanji, Chief Executive Officer, 11 Plc, said that the loan would help NNPCL to clear some of its huge backlog debts.
Oyebanji said, “if NNPCL had collected from the Direct Sale, Direct Purchase (DSDP) suppliers to give them crude and have not been able to pay, this loan facility it will enable them to pay.”
Oyebanji, who is also a former Chairman of Major Oil Marketers Association of Nigeria (MOMAN), said that the process would free up the dollar and also ease foreign change.
According to him, the CBN reports showed that external reserve situation is a bit disturbing, like many sales of dollars.
“What we required is much more than the three billion dollars loan can address and bring about normalcy.
“This will improve the situation. And for me, l think l preferred this than the swap arrange because it was very clear and open to everybody but the crude swap was not open,” he explained.
For the industry, Oyebanji said, “we are back to the nature of NNPCL being the sole importer of petrol, is like taking a step backwards.
“So, to me, the quantum of subsidy has been reduced, but l dought if we can say that subsidy has been completely eliminated.
“We can only hope for better tommorow. The decision that needs to be taken still need to be taken, if not, we will be dipping a deeper hole.”
