The federal government says it is considering a regulatory forbearance for banks to restructure loans granted to oil and gas firms currently facing debt servicing challenges due to the COVID-19 pandemic.
Regulatory forbearance simply refers to regulators’ refraining from exercising their right to put an insolvent bank out of business. Such banks are allowed to continue operating.
Speaking on Thursday at the 2021 Society of Petroleum Engineers (SPE) Oloibiri Lecture Series and Energy Forum (OLEF) in Abuja, Timipre Sylva, minister of state for petroleum resources, said the policy will protect banks exposed to debts from oil firms.
He explained that the revenues of the companies have dwindled due to the impact of the coronavirus pandemic on crude oil prices.
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“In this regard, all stakeholders were brought together to find a cost reduction strategy in the upstream sector through contract negotiations, reduction of contracting circle time, sharing of common facilities, curtailment of personnel logistics, review of crude handling contracts and installation of least automatic custody transfer unit,” Sylva said.
“Government is equally considering the granting of regulatory forbearance to banks to restructure terms of facilities to oil and gas investments that are currently facing debt servicing challenges due to the COVID-19 pandemic.”
The minister, who was represented by Moses Olamide, his chief of staff, noted that in the downstream sector, market-driven price of petrol was being considered to complete full deregulation of petroleum products in Nigeria.
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