* State-oil firm borrows $1.5 bln to pay fuel debts
* BNP Paribas, Standard Chartered, Natixis among lenders
* NNPC puts up oil money to help pay back $3.5 bln debt
By Chijioke Ohuocha
LAGOS, Jan 8 Nigeria's state-owned oil company
NNPC is borrowing from at least 10 banks and using revenue from
oil production to help clear a long-overdue $3.5 billion debt
owed to foreign fuel traders, a banking source close to the deal
said on Tuesday.
NNPC struck a deal led by Standard Chartered Bank
at the end of last year to borrow $1.5 billion from a mixture of
foreign and Nigerian banks over a period of five and a half
years priced at 375 basis point over Libor, the banking source
The foreign banks providing funds include France's BNP
Paribas, Standard Chartered, Natixis,
multilateral lender Afrexim Bank, a local unit of Standard Bank
and Korea's MMC, while the Nigerian banks
were United Bank for Africa, Ecobank, First
Bank and Union Bank, the source told Reuters.
The top African oil producer's NNPC owes major commodity
trading houses, including Glencore and Mercuria, around $3.5
billion in unpaid fuel supply bills, according to a report last
year commissioned by the Nigerian oil ministry.
The last ditch deal is seen as crucial to easing the burden
on big commodity traders facing the prospect of painful
multi-million dollar write-offs on those bills and saving
Nigeria from defaulting on the loans, which would have worried
credit agencies that recently upgraded the country.
The NNPC agreed to put up 15,000 barrels per day of its oil
production as collateral when the loan negotiations began last
year, the banking source said.
The company has already earned $404 million from that
committed oil since talks began, and it will add those funds to
the $1.5 billion borrowed to pay its debt to oil traders, the
source said. NNPC declined requests for official comment.
The repayment of these debts will provide some relief to a
Nigerian fuel industry in disarray as trading firms have been
battling for months to recoup the money and some have since
stopped supplying Nigeria with fuels.
Despite being among the world's top 10 crude oil exporters,
poor governance, graft and dilapidated refineries mean it has to
import most of its fuel needs, on which is pays costly subsidies
to keep a lid on retail petrol prices.
Government-funded fuel imports do not guarantee enough
petrol for Nigerians. The artificially low price means fuel
often runs out or gets smuggled to neighbouring nations.
Traffic queues snaking for hundreds of metres outside pump
stations are a common sight.
President Goodluck Jonathan attempted to end the corrupt
fuel subsidy scheme in Nigeria a year ago but backed down after
it sparked widespread protests against higher fuel costs.
NNPC is the biggest buyer of fuel from importers but the
state-firm is debt-ridden and hampered by mismanagement and
corruption and increasingly it has to swap the country's crude
oil for fuel because banks won't provide lines of credit.
A long-delayed oil bill currently before parliament proposes
a widespread overhaul of NNPC, including splitting it up and
incorporating part of it, and listing the new corporate on
Nigeria's stock exchange.