By Adedapo Adesanya
Nigeria will receive the $1.05 billion second tranche of the $3.3 billion crude repayment loan from the African Export-Import Bank (Afreximbank) in May.
The loan backed by oil is part of efforts to revive the Nigerian economy and boost the supply of the Naira in the FX market.
The first disbursement of $2.25 billion was made earlier this year and it was reported that the second tranche of $1.05 billion is expected to be disbursed subsequently. This will now be disbursed next month.
Afreximbank successfully arranged the syndicated $3.3 billion crude oil prepayment facility sponsored by the Nigerian National Petroleum Company (NNPC) Limited.
The landmark financing is Nigeria’s largest crude oil prepayment facility and one of the largest syndicated loans raised in Africa in 2023. The 5-year facility carries a margin of 6.0 per cent per annum above the 3-month secured overnight financing rate (SOFR).
The transaction structure has an embedded price balance mechanism where 90 per cent of all excess cash from the sale of the committed barrels (after debt service) will be released while the balance of 10 per cent will be used to repay the facility, effectively shortening the final maturity of the facility and freeing cash flow from future pledged cargoes for use by Nigeria.
The initial participating lenders are Afreximbank, Africa’s multilateral trade finance institution, Gunvor International BV, a Geneva-based multinational energy and commodities trading company and Sahara Energy Resources Limited, an African-owned, leading international energy and infrastructure conglomerate.
Speaking then after the first tranche was paid to the country, Afreximbank President and Chairman of the Board of Directors, Mr Benedict Oramah, explained that “this facility further demonstrates the Bank’s commitment to supporting African economies when such assistance is most needed. Afreximbank stands by its member countries in good and difficult times.
“The disbursement of the initial $ 2.25 billion under the facility will support Nigeria’s long-term economic stability, ease access to import financing for raw materials and essential goods, and support industrialization and trade development efforts. We are pleased that despite the typical year-end encumbrances, our partners and investors rallied and raised the funds required in record time. We thank them for their support”.
The NNPC Group Chief Executive Officer, Mr Mele Kolo Kyari, on his part, noted that “the proceeds of the facility have been made available to the Federal Republic of Nigeria as one of several efforts towards improving macro-economic stability. The participation of global, international and regional syndication firms is a further testament to the lending market’s appetite for financing sponsored by NNPCL and signifies solid market confidence in Nigeria.”