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Aiteo Owes Shell, Seven Nigerian Banks $1.7bn – Report


Aiteo Owes Shell, Seven Nigerian Banks $1.7bn - Report

Seven Nigerian banks have claimed that popular oil company, Aiteo Eastern E&P owe them$1.7bn.

According to the lenders, the failure of the oil company to pay the loan very soon may affect the Nigerian financial system in the nearest future.

According to a Bloomberg report, Shell Plc, Zenith Bank Plc, Fidelity Bank Plc, Guaranty Trust Bank Plc and others loaned Aiteo the money to buy a pipeline and an operating interest in one of the nation’s most priced onshore oil blocks seven years ago for $2.4bn.

The report said the banks loaned the oil company $1.5bn to support the acquisition, while Shell – the seller of the assets – provided $504m in financing.

However, the parties had been locked in a tangled legal dispute since October 2019 when the creditors notified Aiteo that it was in default.

The lenders claimed the debt owed climbed to $1.7bn by the end of last year, from less than $300m in late 2019, according to a ruling by the English commercial court on April 1.

The financiers said the increase in the loan amount was due to missed repayments, unpaid interest, and default penalties. The lenders had said this before an arbitration case against Aiteo in late 2020 when the amount stood at $910m.

According to the Africa Finance Corporation, which administers the financial agreement between Aiteo and the bank creditors, the loans are important within the Nigerian banking system and ‘represent significant credits on the books’ of the exposed institutions.

In written evidence to the court, AFC said a default under the loans would be a very serious matter for Shell and the involved banks.

The UK court earlier this month made permanent an injunction obtained by the lenders and AFC in late 2020 that instructed the oil firm it was contractually required to stop challenging the debt claim in Nigerian courts and to resolve any disputes before an arbitration tribunal in London.