According to the latest data acquired from the Central Bank of Nigeria, the debts due to Nigerian banks by oil and gas operators as well as electricity providers have surpassed N6 trillion.
Energy companies’ bank indebtedness grew to N6.14 trillion in June 2021, up from N5.94 trillion at the end of 2020.
According to the CBN’s sectoral analysis of banks’ credit, the N6.14 trillion equals 28.05 percent of the N21.89 trillion in loans granted to the private sector by banks as of June 2021.
Oil and gas companies, which obtained the most bank credit, increased their debt by N140 billion to N5.32 trillion by June 2021, up from N5.18 trillion in December 2020.
According to CBN data, power companies owing banks N823.28 billion in June 2021, up from N763.22 billion in December 2020.
As of June 2021, oil companies in the downstream, natural gas, and crude oil refining subsectors owing N3.99 trillion, up from N3.93 trillion at the end of the previous year, while those in the upstream and services subsectors owed N1.33 trillion, up from N1.25 trillion at the end of 2020.
Power generation companies and independent power producers owed banks N482.30 billion in June 2021, up from N443.37 billion in December 2020, and transmission and distribution companies owed banks N340.98 billion, up from N319.85 billion in December 2020.
Many oil and gas businesses were forced to cut their capital expenditures and suspend some projects due to the drop in oil prices in 2020 as a result of the coronavirus pandemic.
The International Monetary Fund (IMF) remarked in February that while the Nigerian banking sector’s resilience was commendable, continuous vigilance was required to limit financial stability risks.
COVID-19 debt relief measures for bank clients, according to the IMF, should be time-limited and limited to those with excellent pre-crisis fundamentals.
The CBN’s Monetary Policy Committee reported in its most recent meeting that banks’ non-performing loans ratio, which was 5.70 percent in June 2021 compared to 6.4 percent in June 2020, had improved gradually.
The committee, on the other hand, recommended the central bank maintain its strict prudential regime in order to keep NPLs below the 5% prudential benchmark.
The MPC praised the banking system’s ongoing resilience in the face of significant shocks to the local and global economies.