Many banks have reached obligor limit in oil & gas sector, says expert

A lot of banks in Nigeria have reached their single obligor limit in the oil and gas sector, Ms Ronke Onadeko, Principal Consultant, DRNL Consult Limited, has said.

Speaking at a virtual training with the theme: Improving understanding of FICAN on the impact of the global oil price crash, organized the Facility for Oil Sector Transformation (FOSTER) in partnership with the Finance Correspondents Association of Nigeria (FICAN) in Lagos on Tuesday, she said unfortunately many of the companies the bank lent to cannot repay because of the crisis in the sector, which has caused prices to drop significantly.

Crude oil price dipped bellowed $15 per barrel in March due to trade war between Saudi Arabia and Russia and the coronavirus pandemic.

She said as a result of this, some of the states are finding it challenging to meet their obligations as the revenue they get from the Federation Account has shrunk significantly.

Mrs Onadeko noted forms are eminent in the Nigerian oil and gas sector, which would make it more competitive and attractive to foreign investors.

According to her, there would be a lot of policy changes in the sector, which will lead to players embracing mergers and acquisitions.

He projected that Nigerians would see many technological improvements in the oil and gas sector before the end of this year,

He mentioned that the government has only liberalized the sector but may soon move to fully deregulate it.