The federal government is expected to receive $1.05 billion from a syndicated loan backed by oil by the end of May to help revive the economy and improve the foreign-exchange market.
The $1.05 billion loan is part of the $3.3 billion “pre-export finance facility” (PxF) facilitated by the Nigerian National Petroleum Company (NNPC) Ltd and arranged by the African Export-Import Bank (Afreximbank) in January 2024.
In the deal, Nigeria pledged a total of 164.25 million barrels of crude oil — at 90,000 barrels per day — starting from 2024 to repay the loan through Project Gazelle Funding Ltd, an “orphan” special purpose vehicle (SPV) incorporated in Bahamas for the PxF.
The NNPC had received the initial disbursement of $2.25 billion of the agreed $3 billion under the crude oil prepayment facility.
Speaking on the loan on Monday, Denys Denya, senior executive vice president for finance, administration and banking at Afreximbank, said the loan would be finalised next month.
“The verification of the crude availability has happened so we expect in the next month to finalize the release of the balance,” Denya said.
“Based on future production, you get the money now.”
Denya also said the facility has participation from commercial banks and oil traders, most of which have already secured internal approvals.
The Afreximbank oil-for-cash loan agreement with NNPC is expected to attract an interest of 11.85 percent per annum.
The loan is also expected to help with the acute foreign exchange shortage in Nigeria and stabilise the country’s financial system.
Speaking further, Denya said the firm is also finalising a $200 million funding plan that includes guarantees, and letters of credit to support the East African crude oil pipeline linking Uganda’s oil fields to Tanzania’s port of Tanga.
The project, which is estimated to cost $5 billion, has received criticism from climate activists who have successfully persuaded lenders and insurers to steer clear of the pipeline.
Denya, however, said the construction of the 1,443-kilometer (897-mile) pipeline “will improve intra-regional trade which is part of our mandate, so it ticks all the boxes for us — there’s really no reason for us not to be supporting this”.
He also said the investments will add to plans by Afreximbank to increase loans and advances by 53 percent to as much as $40 billion by year-end.
