The combined bank lending to oil firms operating in the downstream and upstream subsectors of the Nigerian oil and gas industry was N6.62tn as of December 2022, according to data from the Central Bank of Nigeria. (CBN).
While operators in the downstream, natural gas and crude oil refining subsector owed banks N4.71tn, operators in the upstream and services subsectors were indebted to banks to the tune of N1.91 trillion.
The total debt rose by 110.83 per cent from N3.14tn in 2016 to N6.62tn in 2022. The debt has increased significantly over the years as the gas sector is struggling to service its debt and defaulting on loans.
This has raised banks’ exposure to non-performing loans in 2022, according to an analysis of the financial statements of Guaranty Trust Bank, United Bank for Africa, Zenith Bank, Ecobank Nigeria, Fidelity, and WEMA Bank. An NPL occurs when the borrower fails to make scheduled payments for a specified period.
The 2022 financial statements of the Guaranty Trust Bank showed that N21.6bn was recorded as NPLs from firms in the oil and gas sector (midstream and downstream). GTB’s NPLs stood at 5.19 per cent of total loans disbursed.
