The Central Bank of Nigeria (CBN) has reported that oil and gas and power companies’ indebtedness to Nigerian banks increased from N5.94 trillion at the end of last year to N6.14 trillion by the end of June this year, representing about N1.20 trillion rise.
The latest data obtained from the apex bank on the affected entities’ debt stock to the lenders indicated that the N6.14 trillion liability represents 28.05 per cent of the N21.89 trillion loans to the private sector by the banks as of June 2021.
A sectoral analysis of the oil and gas and power companies’ indebtedness to the banks showed that the oil and gas firms, which secured the biggest share of the credit from the banks, increased their debt portfolio by N140 billion to N5.32 trillion at the end of June 2021 from N5.18trillion in December 2020.
Similarly, power firms’ indebtedness also rose to N823.28 billion in June 2021, up from N763.22 billion at the end of December 2020
According to the apex bank, a further breakdown of the oil companies’ debt stock on sectoral basis showed that entities operating in the downstream, natural gas and crude oil refining subsectors owed N3.99 trillion as of June 2021, from N3.93 trillion at the end of last year, while others operating in the upstream and services subsectors owed N1.33 trillion as of June 2021, up from N1.25 trillion at the end of 2020.
In addition, the CBN data showed that power generation companies and independent power producers’ debt stock rose to N482.30billion in June 2021, from N443.37 billion in December 2020, just as power transmission and distribution entities’ indebtedness to the banks also increased to N340.98 billion, from N319.85 billion as of December last year.
Analysts have linked the companies’ rising debt stock partly to the slump in oil prices in 2020 following the disruptions caused by the COVID-19 pandemic in oil and gas, power and other major sectors of the Nigerian and other economies globally.
Available data on developments in the nation’s hydrocarbon resources and power industries over that past two years showed the most of the entities were compelled to reduce their capital expenditures, thereby leading to the suspension of key projects which would have earned them incomes to offset their liabilities in the banks.
