International Energy Firms To Release $200million To Fund Fuel Imports

The Minister of state for petroleum, Emmanuel Kachikwu, has said international energy companies in Nigeria have agreed to provide about $200 million to help fund fuel imports amid a foreign-currency shortage.

“I have been able to convince the upstream oil companies to provide foreign exchange buffers over the next one year for those who are bringing in products,” he said in video posted on his Facebook page on Thursday, April 7 .

Total SA and Exxon Mobil Corp will provide dollars to their local retail units, Total Nigeria Plc and Mobil Oil Nigeria Plc, while Royal Dutch Shell Plc has been paired with local oil importer Conoil Plc, and Eni SpA with Oando Plc, Kachikwu said.

“Getting the upstream companies to intervene and matching them to downstream business lines for the provision of foreign exchange is an ingenious move,” the senior associate of energy and projects at Lagos-based law firm, Templars, Oyeyemi Oke, said.

“Although a short-term strategy, it would mitigate the current challenges faced by major marketers with regards to access to foreign exchange,” Bloomberg quoted Kashikwu. “That said, a long-term solution to ensure availability of petroleum products should be put in place,” including ensuring existing refineries are operating at full capacity and new facilities are built, and liberalizing access to foreign exchange, he said.

However, there was no mention of the possible gains of the energy companies in the deal.