Afreximbank Loan: Federal Government Eyes $1 Billion in May

Afreximbank Loan: Federal Government Eyes $1 Billion in May
BBC

Afreximbank Loan: Federal Government Eyes $1 Billion in May

Nigeria is poised to receive a $1.05 billion syndicated loan supported by oil from the African Import Export Bank in the coming month. This loan is part of a larger $3.3 billion prepayment facility orchestrated by Afreximbank, with repayment terms linked to crude cargoes from the Nigerian National Petroleum Company Ltd.

According to Bloomberg, Denys Denya, Afreximbank’s Senior Executive Vice President for Finance, Administration, and Banking, has confirmed the verification of crude availability, paving the way for the final release of the remaining balance within the next month. The loan aims to rejuvenate Nigeria’s economy and bolster the supply of hard currency in the local foreign exchange market. Notably, two-thirds of the loan has already been disbursed in January.

This financial strategy is crafted to provide Nigeria with immediate funds based on future oil production, offering crucial support to the country’s struggling economy.

The Nigerian National Petroleum Company Limited had previously announced its intention to prepay future royalties and taxes to the Federal Government from the $3.3 billion financing deal secured from the African Export-Import Bank last year. The company aims to utilize the loan to aid the Federal Government in stabilizing Nigeria’s exchange rate.

The $3.3 billion emergency crude oil repayment loan secured by the NNPCL from Afreximbank was reported by The PUNCH on August 17, 2023. The company emphasized the adoption of a lower price benchmark for the deal to minimize the risk of default and ensure financial stability. It specified a conservative crude price of $65/barrel to calculate the allocated crude to be produced and sold in the future, providing a safety margin for potential price fluctuations.

The NNPCL has reserved up to 90,000 barrels of crude for the project, known as “Project Gazelle,” ensuring adequate cash flow for repayment and other financial commitments. Repayments are strategically planned and tied to future oil sales, with conservative pricing in oil sales contracts mitigating risks associated with oil price volatility.

TRENDING

Related Posts