The Nigerian National Petroleum Corporation (NNPC) has said that Nigerian banks are now involved in providing funding for the upstream sub-sector of the petroleum industry.
The Group Managing Director of the NNPC, Dr. Maikanti Baru, noted in Abuja that banks are increasingly becoming involved in the upstream because of the corporation’s adoption of the alternative financing models for funding its Joint Venture (JV) obligations.
Baru stated this at the 42nd Society of Petroleum Engineers (SPE) Nigerian Annual International Conference and Exhibition (NAICE), acknowledging that the alternative financing models has gone a long way in restoring confidence among investors and had also stimulated further Foreign Direct Investments (FDI) in the oil and gas industry.
According to him, alternative financing has deepened local banks’ participation in the upstream sub-sector of the industry. He observed that traditionally, Nigeria has raised funds utilising equity or self-funding from cash-flow, commercial debt instrument or partner funding in form of Carry or Modified Carry Arrangement (MCAs).
He identified the non-traditional funding options to include contractor-financing/deferred payment, Pension Funds, Private Equity, Sovereign Wealth Funds, Export Credit Agencies (ECAs) and none-less Islamic/Sharia Finance.