Nigeria secures extra $925m in oil-backed mortgage from Afreximbank
<!– tmc_ads_send({ “data-tmc-application”: “240527QJBmDrni”, “data-tmc-seat”: “240527FGR657jX” }) –>
African Export-Import Bank, on Thursday, introduced an extra disbursement of $925m below the syndicated $3.3bn crude oil-backed prepayment facility sponsored by the Nigerian National Petroleum Company Limited.
Its newest accordion disbursement for Project Gazelle Funding Limited brings the full present funded facility dimension to $3.175bn.
Arranged and coordinated by Afreximbank, the accordion association noticed the elevating of a mixed whole of $925m from a consortium of crude oil off-taker lenders together with however not restricted to the Oando Group and Sahara Energy Resource Limited.
“Afreximbank acted as Mandated Lead Arranger, Technical and Modelling Bank, Bookrunner, Facility Agent, Offshore Account Bank, Intercreditor Agent and Collateral Agent for the transaction which is expected to provide further support for Nigeria’s macroeconomic stability and long-term economic growth while enhancing the country’s industrialisation and trade development efforts,” the financial institution said in a press release posted on its web site on Thursday.
This announcement follows the success of the primary accordion tranche of the $3.3bn facility. In December 2023, the undertaking acquired funded commitments totaling $2.25m.
The $925m accordion association raises the full quantity disbursed to $3.175bn.
Commenting on the disbursement, President and Chairman of the Board of Directors of Afreximbank, Prof. Benedict Oramah, stated, “The milestone achieved so far on this facility demonstrates the financial institution’s capabilities in performing its position as a vital growth accomplice for Africa.
“It reaffirms our commitment to assisting our member states in their efforts to achieve economic growth and stability. This funding will greatly support the attainment of Nigeria’s short and long-term economic development priorities.”
Oramah described the unique facility as ‘a landmark’ for being the most important crude oil-backed facility in Nigeria and one of many largest syndicated money owed raised in Africa.
He stated the closure of the primary accordion demonstrated the existence of optimistic market urge for food for effectively structured commodities-backed devices.
The Group Chief Executive Officer, NNPC Limited, Mele Kyari, counseled Afreximbank administration and group for his or her funding philosophy and energetic curiosity in co-creation of prosperity.
“The successful disbursement of the first accordion under project Gazelle and its interest in funding viable and strategic projects is a clear indication of investors’ confidence in NNPC and Nigeria’s growth aspirations,” Kyari said.
He additional assured Afreximbank and all investing communities of NNPC’s resolve to proceed to develop the nation’s hydrocarbon sources and strengthen its partnerships throughout the oil and fuel worth chain domestically, and globally.
On August 17, 2023, The PUNCH reported that the NNPCL introduced that it had secured a $3.3bn emergency crude oil compensation mortgage from the African Export-Import Bank.
It defined that the mortgage could be utilized by the oil firm to assist the Federal Government in stabilising Nigeria’s change fee.
Also in January 2024, The PUNCH reported that NNPC would prepay future royalties and taxes to the Federal Government from the $3.3bn financing deal it obtained from African Export-Import Bank.
The report said that NNPCL disclosed this in a doc titled, ‘Frequently Asked Questions – Project Gazelle’, launched by its Chief Corporate Communications Officer, Olufemi Soneye.
Providing particulars concerning the deal within the doc titled, “Everything you need to know about the NNPC Limited’s $3.3bn loan, also known as Project Gazelle,” the corporate stated, “This is a financing agreement secured by NNPC Limited to prepay future royalties and taxes to the Federal Government.”
The firm additionally said that it adopted a lower cost benchmark for the $3.3bn crude-for-cash mortgage to scale back the chance of default and guarantee monetary stability.
Giving particulars on the benchmark oil value, the corporate stated the power was utilizing a conservative crude value of $65/barrel to calculate the allotted crude to be produced and bought sooner or later.
“This gives a security margin for value fluctuations sooner or later..NNPC Limited has reserved as much as 90,000 barrels of crude for Project Gazelle, guaranteeing ample money movement for compensation and different monetary obligations.
“If oil costs rise, more cash will are available in from promoting the 90,000 barrels, permitting for quicker compensation. However, if oil costs fall, the compensation could also be slower.
“The quantity of crude earmarked (90,000 barrels) is sized to ensure enough cash is available for the repayment of the facility when it is due. This also ensures that NNPC Limited can meet other cash flow obligations, considering the expected future price of crude oil globally,” it said.
NNPC additionally stated repayments have been strategically deliberate and tied to future oil gross sales, with conservative pricing in oil gross sales contracts mitigating the dangers related to oil value volatility.
