Energy firms borrow N548bn from UBA



28 April 2015, Lagos – United Bank for Africa Plc’s, UBA, exposure to the energy sector stood at N548.35 billion for two years, 2013 and 2014. According to the information obtained from bank’s Annual Report and Accounts for the 2014 financial year, the energy sector accounted for 27.26 per cent of its total loans and advances to customers in the two year period.

Specifically, in 2014, energy firms borrowed N287.88 billion from the bank, while in 2013, they borrowed N260.479 billion.

Further breakdown revealed that oil and gas firms borrowed N192.784 billion from the bank in 2013, rising by 5.84 per cent to N204.045 billion in 2014, while power and other energy firms borrowed 67.695 billion in 2013, compared to N83.834 billion recorded in 2014.

In addition to these and other transactions, UBA’s total loans and advances to customers for its 2014 financial years stood at N1.072 trillion, appreciating by 14.29 per cent from total loans and advances of N937.62 billion recorded in 2013.

The banks’ exposure to the energy sector among others was irrespective of its N19.656 billion impairment loss on loans and receivables for the two years, broken down into N13.078 billion in 2013 and N6.578 billion in 2014. Analysts have expressed concern over the ability of the energy firms to repay their indebtedness to the banks, especially in the face of low oil price in the international market.

The analysts are of the view that of the loans might be impaired as the oil firms might be unable to repay. Former
Managing Director, Access Bank Plc, Mr. Aigbojie Aig-Imoukhuede, had expressed concern over the viability of the recently privatised power sector.
*Michael Eboh – Vanguard

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