By Mike Abbah
There are fears of imminent hike in the pump price of petroleum products, including petrol, diesel and aviation fuel, following the suspension of the Naira-for-crude swap deal by the Nigerian National Petroleum Company Limited (NNPCL) with Dangote and other domestic refineries.
The naira-for-crude arrangement, introduced on October 1 2024, allowed local refiners to purchase crude oil in naira instead of dollars.
The initiative was designed to support domestic refining capacity, reduce reliance on imported petroleum products, and stabilize the local currency by easing pressure on foreign exchange reserves.
The decision, which took immediate effect, has sparked discussions about its implications for Nigeria’s energy sector and the broader economy.
The termination of the agreement means that Nigerian refineries, including the much-anticipated Dangote facility, will now have to source crude oil from international suppliers, paying in dollars instead of naira.
This shift is expected to escalate operational costs, potentially leading to higher fuel prices at the pump.
According to sources familiar with the development, the NNPC informed local refiners that it has already committed its crude oil production to forward contracts, leaving no supply available for domestic refineries. This revelation comes despite reports that Nigeria’s crude output has increased since the deal first began.
The suspension has raised concerns among industry stakeholders, particularly for the Dangote Refinery, which is poised to become one of Africa’s largest refining facilities.
The refinery, owned by billionaire Aliko Dangote, has been a key beneficiary of the naira-for-crude deal, as it relies on locally sourced crude to meet its refining needs. Analysts fear the suspension could delay the refinery’s operational timeline and increase costs.
Other private refiners, including Waltersmith Petroman and BUA Refinery, are also expected to feel the impact. The deal had provided them with a cost-effective way to secure crude oil feedstock, enabling them to compete with international players.
Industry experts have warned that the suspension could have ripple effects on Nigeria’s economy. The naira has already faced significant pressure in recent months, and the removal of this dollar-saving mechanism could exacerbate the currency’s volatility.
Additionally, the move may hinder efforts to achieve self-sufficiency in petroleum production, a key goal of the federal government.
They insist that the development would end the price war between Dangote and NNPC as the latter had struggled to match Dangote’s reduced price for its petroleum products.
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*Seven oil companies undertake to pay alleged $37.4m debt to FG*
By Mike Abbah
The House of Representatives has disclosed that seven major operators in Nigeria’s oil and gas industry have undertaken to remit a total of $37,435,094.52 (approximately N58 billion) to the Federation Account before August 2025, acknowledging their outstanding debt.
This was revealed in a statement signed by Rep. Akin Rotimi Jr., Spokesman, House of Representatives, on Sunday, as part of the ongoing investigation into the oil and gas sector by the Public Accounts Committee of the House of Representatives.
It could be recalled that the House of Representatives had summoned 48 oil companies operating in Nigeria to appear before its Committee on Public Accounts for a series of investigative hearings into a combined debt of N9.4 trillion.
In a press release issued by the Office of the House Spokesperson last week, it was disclosed that several oil companies allegedly owe the federation approximately N9.4 trillion.
Companies summoned include major industry players such as Shell Nigeria Exploration and Production Company, Chevron Nigeria Ltd, Total E&P Nigeria, Seplat Energy, Oando Oil Ltd, and Mobil Producing Nigeria Unlimited, among others.
The committee’s probe follows findings in the Auditor-General’s Annual Report on the Consolidated Financial Statement for the year ending December 31, 2021.
The debt, which accumulated as of the last quarter of 2024, comprises unpaid royalties, concession rentals, gas flare penalties, and obligations from Production Sharing Contracts, Repayment Agreements, and Modified Carry Arrangements.
According to the statement, nine companies, with a combined outstanding balance of $429.2 million, have contested the figures and requested a reconciliation process with NUPRC to verify their actual liabilities.
The committee disclosed that it “has directed that the reconciliation process be concluded within two weeks, after which companies must settle their confirmed debts without further delay.”
Furthermore, the committee frowned at about 28 companies for failing to appear before it within the stipulated period, adding that “A total of 28 companies, collectively owing $1,230,708,293.14, have failed to honor invitations by the committee or respond to public notices.”
The committee granted the affected companies a further grace period of one week to submit all relevant documentation regarding their statutory obligations and appear before the committee.
The House stressed that failure to comply within the timeframe will result in firm legislative and regulatory sanctions to enforce accountability and ensure compliance.
The committee further revealed that only two companies were found to have fully met their royalty obligations: Shell Petroleum Development Company (SPDC), and Shell Nigeria Exploration & Production.
The House Committee on Public Accounts vowed to remain steadfast in ensuring that all oil and gas companies operating in Nigeria adhere to statutory payment obligations in line with the Petroleum Industry Act (PIA).
The House of Representatives reiterated that companies benefiting from Nigeria’s natural resources must comply with statutory financial obligations to support national development,
adding, “The committee will continue to intensify oversight to recover outstanding revenues and plug revenue leakages in the industry”.
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*Seplat records 11% increased production from newly acquired Mobil assets*
By Mike Abbah
Seplat Energy Plc has reported that its acquisition of Mobil Producing Nigeria Unlimited (MPNU), now renamed Seplat Energy Producing Nigeria Unlimited (SEPNU), added an 11% increase to its total production.
This was disclosed in the company’s audited financial results for the year ended December 31, 2024.
According to the report, Seplat’s onshore assets averaged 48,618 barrels of oil equivalent per day (boepd) in 2024, a 2% increase from 47,758 boepd recorded in 2023.
The integration of SEPNU contributed an annualized average of 4,329 kboepd, pushing total production to 52,947 boepd.
Following the acquisition, Seplat’s independently audited 2P reserves rose by 85% to 886 million barrels of oil equivalent (MMboe), up from 478 MMboe in 2023.
The company’s total 2P+2C reserves also increased by 125% to 1,217 MMboe, reinforcing its position as a leading player in Nigeria’s energy sector.
Seplat Energy recorded key operational achievements in 2024, including the resumption of 24-hour operations on the Trans Niger Pipeline (TNP) in Q4.
Commenting on the development, Seplat Energy’s Chief Executive Officer, Roger Brown, described 2024 as a defining year for the company, emphasizing the importance of the SEPNU acquisition.
“In addition to delivering key growth projects in our existing onshore business, we closed out 2024 by completing the acquisition of SEPNU, the largest in the company’s history, which adds significant scale and attractive low-cost growth potential,” Brown stated.
He added that Seplat will focus on reopening shut-in wells at SEPNU, executing a full drilling campaign for onshore assets, and achieving first gas production at ANOH.
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*FX burden, MTN, Airtel repay $1.2bn loan to ease pressure*
By Mike Abbah
Nigeria’s two telecom majors, MTN Nigeria Communications Plc and Airtel Africa have cut their foreign debt by repaying $1.2 billion in 2024 to ease foreign exchange burden that impacts their profitability.
It could be recalled that both telcos suffered $1.56 billion in foreign exchange losses following the naira’s steep depreciation in 2023,.
The Central Bank of Nigeria (CBN)’s unification of the country’s foreign exchange market in June 2023 triggered a sharp devaluation of the naira from N471/$ to N1,043.09/$ by December 28, 2023, and N1,512.3/$ by March 7, 2025.
MTN Nigeria declared its first loss after tax of N137 billion since its 2019 listing on the Nigerian Stock Exchange in 2023. Airtel Africa, which had 50.9 million subscribers in Nigeria as of March 2024, reported a loss after tax of $89 million for its full year ended March 2024, primarily due to FX headwinds in Nigeria and Malawi.
To mitigate further FX-induced losses, MTN and Airtel have aggressively cut FX liabilities. MTN Nigeria slashed its outstanding letters of credit (LC) dollar obligations from $416.6 million as of 31 December 2023 to $20.8 million by the end of 2024.
Airtel Africa, on its part, repaid $739 million in foreign currency debt over the last year, reducing its foreign currency debt exposure. Both companies believe that reducing their foreign currency obligations is key to strengthening their financial positions.
At the end of 2023, Olusegun Ogunsanya, the then-chief executive officer of Airtel Africa, stated, “We will continue to focus on reducing our exposure to currency volatility.
“Although this reduction resulted in realised foreign exchange losses, it has substantially strengthened our financial position and lowered the financial risks associated with the depreciation of the naira and its related finance costs,” MTN said in its 2024 results.
However, the debt reduction came at a cost, significantly impacting MTN’s financials. Despite reporting a record revenue of N3.36 trillion for 2024, it recorded a N400.44 billion loss after tax due to forex losses arising from the revaluation of foreign currency-denominated obligations.
It noted that it would have reported a profit after tax of N247.3 billion if not for the net forex loss.
Airtel Africa, on the other hand, recorded a 5.78 percent revenue decline to $3.64 billion from $3.86 billion in the nine months ending December 2024. However, its profit after tax grew 12,300 percent to $248 million from $2 million.
Both companies are shifting towards local debt as their appetite for FX debt wanes. Airtel Africa now holds 92 percent of its debt, excluding lease liabilities, in local currency, up from 79 percent a year ago.
Sunil Taldar, chief executive officer of Airtel Africa, noted, “Our capital structure remains robust with just 8 percent of OpCo debt in foreign currency — a substantial improvement over the last year.”
MTN has also restructured its loan portfolio, with 72 percent now in naira and 28 percent in dollars, compared to 56 percent naira and 44 percent dollars in 2023. Its total net debt dropped 29 percent to N591 billion by the end of 2024.
To finance operations locally, it raised N190 billion under its N250 billion Commercial Paper Issuance Programme.
On an investors’ call, Modupe Kadri, MTN Nigeria’s chief financial officer (CFO), noted that as of December 2023, the telco had an overall foreign exchange exposure of $1 billion, but it was reduced to about $300 million by the end of 2024.
Renegotiation of tower lease contracts
Beyond debt restructuring, telcos renegotiated tower lease contracts with infrastructure companies such as IHS, INT Towers Limited, and ATC Nigeria to curb FX and energy-related costs.
MTN’s renegotiation with IHS alone resulted in N113.8 billion in operational savings. Telcos are also increasingly adopting local solutions to minimise FX exposures and improve margins.
“We will focus on cost savings through our expenditure resiliency programme and implement localisation initiatives to further reduce foreign exchange exposure and operating expenditure and to improve financial resilience.
“We believe these efforts will help us maintain our competitive edge and drive additional growth in service revenues, support margin recovery, and restore our capital position,” said Karl Toriola, chief executive officer of MTN, during the telco’s investors’ call
