Nigeria and Saudi Arabian oil company Aramco have been unable to reach an agreement on a $5 billion oil-backed loan, according to Reuters.
Sources told Reuters that the delay was due to a persistent decline in crude prices, which had sparked concerns among banks expected to back the deal.
According to Reuters, the facility would be Nigeria’s largest oil-backed loan to date and Saudi Arabia’s first participation of this scale in the country, although the decline in oil prices could shrink the size of the deal.
The news platform, quoting sources, alleged that Nigeria’s President Bola Tinubu first broached the loan in November last year when he met with Saudi Crown Prince Mohammed bin Salman in Riyadh at the Saudi-African Summit. Meanwhile, details and progress on the loan talks have not been previously reported.
The slow progress in discussions between oil-producing countries reflects the strain of the recent oil price drop, caused largely by a shift in OPEC+ policy to regain market share rather than curtail supply.
Accordingly, Brent has fallen about 20 percent to around $65 per barrel from above $82 in January this year. This indicates that a lower oil price means Nigeria could require more barrels to back the loan, but years of underinvestment are complicating its ability to meet production goals.
The development comes as President Tinubu recently sought approval for $21.5 billion in foreign borrowing last month to bolster the budget; Reuters hinted that the $5 billion oil-backed facility under discussion with Aramco would form part of that.
Reacting on X on Tuesday, an economist, Kelvin Emmanuel, said, “The CME doesn’t understand capital formation. And it shows in the choice to structure resource-backed loans to finance budget deficits. He doesn’t want to do heavy lifting, and it’s straining all the best efforts of the Central Bank.”
DAILY POST reports on 27 May that Tinubu wrote to Nigeria’s National Assembly to seek approval to secure external loans of $21.5 million and ¥15 billion as part of the federal government’s proposed 2025–2026 external borrowing plan.
The fresh external borrowing request had sparked a reaction amid Nigeria’s rising debt, which stood at around N144 trillion at the end of 2024, according to the Debt Management Office.
