Debt levels in Nigeria’s oil and gas sector nearly doubled in the first nine months of 2024, driven by the Naira’s depreciation and rising interest rates, according to THE NEWS CHRONICLES study.
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By the end of September 2024, borrowings for oil and gas businesses listed on the Nigerian Exchange (NGX) had increased by 73 percent, from N1.72 trillion at the start of the year to N2.97 trillion.
Aradel Holdings, Oando Plc, Seplat Energy, TotalEnergies Marketing Nigeria, Conoil, MRS Oil Nigeria, and Eterna Plc are the seven oil and gas companies that are listed on the NGX. These businesses work in the downstream, midstream, and upstream industries.
Oando Plc’s borrowings increased to N1.61 trillion in the first half of 2024 (H1 2024) from N818.3 billion at the beginning of the year, according to data analysed by TNC.
While some companies’ borrowings significantly increased, others saw a sharp decrease. For instance, MRS Oil Nigeria paid off all of its N1.4 billion in debt in just nine months.
Naturally, the upstream companies accrued the largest debts, with Oando Plc at the forefront. Oando took out a new loan in H1 2024 for N655.5 billion, while the company also paid back its existing loans with N289.5 billion.
In essence, Oando’s borrowings rose by N790.7 billion during the course of the half-year, which was a result of both rising interest rates and the depreciation of the Naira.
As of September 30, 2024, Seplat’s borrowings had grown by 66 percent, from N679.7 billion at the beginning of the year to N1.13 trillion. Seplat didn’t take out any additional loans during this time.
However, as a sizable amount of the company’s non-current borrowings are in USD, the depreciation of the Naira increased its debt load by an additional N524.9 billion. At the moment, Seplat has a revolving credit arrangement worth $350 million.
Seplat repaid over N151.2 billion in principle and interest on its outstanding debts during the reviewed period. During the nine months, the corporation also accrued N75.4 billion in new interest due to elevated interest rates.
Despite spending N30.2 billion on principle and interest repayments over the same time, Aradel Holdings, another upstream and midstream business, also saw a 26% increase in its debt profile in just nine months.
Despite not taking out any new loans during that time, Aradel’s liabilities increased by N37.6 billion due to the depreciation of the Naira. Due to accrued interest, the company’s loan from GTBank grew from N16.9 billion to N56.1 billion in just nine months.
TotalEnergies borrowed N101.5 billion for the nine months, up 20% from N84.5 billion at the beginning of the year. The increase in the effective interest rates on Total’s bank overdrafts was the primary factor behind the expansion of its loan profile.
While TotalEnergies took in a fresh N133.2 billion, it spent N161.6 billion on loan repayments, resulting in a net cash outlay of N53 billion for financing activities over the nine months.
By the end of September 2024, Conoil’s borrowings had decreased by 62 percent, from N32 billion at the beginning of the year to N12.3 billion. All of Conoil’s loans are overdrafts from banks, and they are all subject to the bank’s set effective interest rate.
In the first nine months of 2024, Eterna Plc’s borrowings decreased by 1 percent, from N43.2 billion at the beginning of the year to N42.7 billion as of September 30, 2024. During the nine months, the group took out new loans totalling N117 billion, but they also spent N138.4 billion repaying bank loans.
Nevertheless, the depreciation of the Naira resulted in an additional liability for Eterna of N13.4 billion.
