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Stakeholders say CBN action will affect funding of oil, gas sector

Some stakeholders in the Oil and Gas industry have said that the action of the Central Bank of Nigeria (CBN) will affect the ability of the sector to source its development funds. Some of the stakeholders told newsmen in Lagos on Tuesday that oil and gas firms might no longer be able to source funds for their upstream and downstream projects. The CBN announced the sack of five bank chief executives on Aug. 14 over alleged exposure to N1.143 trillion worth of non performing loans.

Sanusi
Sanusi

Of the amount, exposure to the oil and gas sector amounted to N487.02 billion. Mr Adebisi Bada, Chairman, Mosinmi Chapter of the Independent Petroleum Marketers Association of Nigeria (IPMAN) said that the pronouncement by the CBN would create uncertainties in the banking industry.

He said that the uncertainties could affect the ability of the oil firms to know which banks to partner with for their development initiatives. Bada said that it would also affect projects in the upstream sector since most of the projects were being supported by foreign banks. He said that the Federal Government should compel multinational oil firms to award contracts to Nigerian companies since they received some financial facilities locally.

Bada said that the operation of the Nigerian content policy might now depend on the appreciation of the essence of using indigenous companies to execute projects in the sector.

“We should also not forget that the crisis in the Niger Delta is as a result of the domination of multinationals in the region, who generally do nothing to develop their host communities, but repatriate their profits to their home countries. Mr Victor Agbe-Davies, President, Nigerian Association of Petroleum Explorationists (NAPE), said that it would be difficult for banks to give loans to oil and gas firms due to the CBN advertorial on the debts.Agbe-Davies said that the advertorial would also impact negatively on the oil and gas sector.“It will be challenging for the affected banks to give out loans to finance oil and gas projects,” he said.

An official of a downstream company, which was listed as one of the debtors, told NAN that the rising debt profile of operators in oil and gas was due to the fall in crude oil prices last year from $147 per barrel to $30 per barrel at the end of 2008. He noted that the price fall started as a result of the global financial crisis and growing fuel importation in Nigeria.


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