Oil firms borrow N3.44trn from Nigerian banks

By Michael EBOH

Oil and gas firms’ operating in the country borrowed about N3.443 trillion from banks in Nigeria in a two- year period between 2011 and 2012.

According to data obtained from the Nigerian Deposit Insurance Corporation, NDIC, of the N15.424 trillion facilities given out by the banks to operators in the economy during the period in review, the oil and gas sector received the highest portion, accounting for 22.32 per cent of the total.

The NDIC, in its annual reports and accounts, disclosed that as at the end of 2012, the exposure of oil and gas firms to banks in the country stood at N1.913 trillion, while the oil firms borrowed N1.53 trillion from the banks in 2011.

The amount borrowed in 2012 is 24.84 per cent improvement above the N1.53 trillion borrowed by the oil firms in 2011.

In 2012, the exposure of oil firms to the banks, according to the NDIC, represents 23.47 per cent of the total loans extended to key sectors of the economy, while in 2011; it amounts to 21.03 per cent of the total credit extended.

Compared to the oil and gas sector, the banks gave out loans totaling N1.185 trillion, representing 14.55 per cent of the total, to the manufacturing sector; N977 billion (11.99 per cent) to the General sector; N813.4 billion (9.98 per cent) to the General Commerce sector, while the information and communication sector got N722.87 billion (8.87 per cent).

Others are Governments

— N640.06 billion (7.85 per cent); Real Estate sector

— N376.58 billion (4.62 per cent); Agricultural, Forestry and Fishing N293.09 (3.60 per cent), while other unlisted sectors got N1.228 trillion (15.07 per cent).

In 2011, the Manufacturing sector was exposed to banks to the tune of N1.108 trillion, representing 15.24 per cent of the total credit to the economy; General sector got N854.1 billion, representing 11.74 per cent of the total; General Commerce sector

— N809.2 billion (11.12 per cent); Information and Communication sector

— N628.14 billion (8.64 per cent) and Governments

— N542.93 billion (7.46 per cent).

Others are: Real estate

—N377.33 billion, representing 5.19 per cent of the total; Agriculture, Forestry and Fishing

—N226.13 billion, representing 3.11 per cent, while other unlisted sectors received N1.197 trillion, representing 16.47 per cent.

Giving a breakdown of activities in the oil sector in 2012, the NDIC said Nigeria’s crude oil output succumbed to the impact of natural disaster, oil theft and oil pipelines sabotage, as production which stood at 2.48 million barrels per day as at August 2012, declined to 1.98 million barrels per day as at the end of 2012.

The NDIC further stated that the flood which ravaged the oil rich Niger Delta compelled Royal Dutch Shell and Total, to shut down part of their production plants.

It said, “The flood reduced oil production drastically by about 500,000 or 0.17 per cent by the end of  2012. Thus, as at the end of the period under review, production averaged 1.98 million barrels per day (mbpd) as against 2.39 million barrels per day recorded in 2011.

”In line with government’s commitment to a tighter fiscal stance, the benchmark price of oil remained at US $ 75 per barrel in the third quarter of the year.

“However, the average spot price of Nigeria’s reference crude, the Bonny Light, at the International market rose marginally from US $113.12 in October 2011 to US $113.76 as at the end of August 2012.

“The gross external reserves stood at US$44.178 billion as at end of December 2012, representing an increase of US$11.193 billion or 33.93 per cent over the level of US$32.985 billion attained in January, 2012 and an increase of US$11.263 billion or 34.22 per cent over the December 2011 figure of US$32.915 billion.

“The increase in the reserve level was driven mainly by proceeds from crude oil and gas exports and crude-oil related taxes as well as reduced funding of the WDAS.”