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Nigeria bags fresh $925m in oil-backed loan from Afreximbank

Nigeria bags fresh $925m in oil-backed loan from Afreximbank

The African Export-Import Bank (Afreximbank) announced an additional disbursement of $925 million as part of the syndicated $3.3 billion crude oil-backed prepayment facility sponsored by the Nigerian National Petroleum Company Limited (NNPCL). This latest funding, under Project Gazelle Funding Limited, increases the total disbursed amount to $3.175 billion.

Afreximbank, acting as the Mandated Lead Arranger and in various other roles, coordinated the accordion arrangement, which raised $925 million from a consortium of crude oil off-taker lenders, including the Oando Group and Sahara Energy Resource Limited. The bank stated that this transaction is expected to bolster Nigeria’s macroeconomic stability, long-term economic growth, industrialization, and trade development efforts.

This announcement follows the successful first tranche of the $3.3 billion facility in December 2023, which secured $2.25 billion in commitments. Commenting on the milestone, Afreximbank President and Chairman Prof. Benedict Oramah highlighted the bank’s commitment to supporting African economic growth and stability, describing the facility as a crucial development partnership for Nigeria.

Prof. Oramah praised the original facility as the largest crude oil-backed financing in Nigeria and one of the largest syndicated debts in Africa, noting the strong market appetite for well-structured commodities-backed instruments.

NNPCL Group Chief Executive Officer Mele Kyari expressed gratitude to Afreximbank for its investment philosophy and commitment to funding strategic projects, emphasizing that the successful disbursement reflects investor confidence in NNPCL and Nigeria’s growth objectives. He assured that NNPCL would continue to develop the nation’s hydrocarbon resources and strengthen partnerships across the oil and gas value chain.

Previously, in August 2023, NNPCL secured a $3.3 billion emergency crude oil repayment loan from Afreximbank to support the Federal Government in stabilizing Nigeria’s exchange rate. Additionally, in January 2024, The PUNCH noted that NNPCL planned to prepay future royalties and taxes to the Federal Government from this financing deal.

Details from NNPCL’s Chief Corporate Communications Officer, Olufemi Soneye, explained that the company adopted a conservative crude price benchmark of $65 per barrel to minimize default risks and ensure financial stability. NNPCL has allocated up to 90,000 barrels of crude for Project Gazelle, ensuring adequate cash flow for repayment and other financial obligations.

The repayment strategy is tied to future oil sales, with conservative pricing in contracts designed to mitigate oil price volatility risks. This approach ensures that NNPCL can meet its cash flow obligations while maintaining financial stability despite fluctuations in global oil prices.

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