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FG Receives $2.25bn From NNPC’s $3.3bn Oil-For-Cash Loan Facility

NNPC Achieves Remarkable Growth, Profits Soar to N2.54 Trillion in 2022

The African Export-Import Bank (Afreximbank) and the United Bank for Africa (UBA) have successfully disbursed $2.25 billion as part of the $3.3 billion oil-for-cash loan facility, facilitated by the Nigerian National Petroleum Company Limited.

In an announcement made by UBA over the weekend, an initial disbursement of $2.25 billion has been executed, with an additional tranche of $1.05 billion expected to be disbursed in the near future.

Acting as the Local Arranger and Onshore Account Bank for this transaction, UBA revealed that the five-year facility carries a margin of 6.0 per cent per annum above the three-month secured overnight financing rate.

The transaction is structured with an embedded price balance mechanism. Under this arrangement, 90 per cent of all excess cash generated from the sale of the committed barrels (after debt service) will be released to the borrower.

Meanwhile, the remaining 10 per cent will be allocated to repay the facility, effectively shortening the final maturity of the facility and freeing up cash flow from future pledged cargoes for Nigeria’s use.

In response to the successful financial close, Afreximbank’s President and Chairman of the Board of Directors, Professor Benedict Oramah, commented, “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 $2.25bn under the facility will support Nigeria’s long-term economic stability, ease access to import financing for raw materials and essential goods, and support industrialisation and trade development efforts. We are pleased that despite the typical year-end pressures, our partners and investors committed the funds required in record time. We thank them for their support.”

NNPC Group Chief Executive Officer, Mele Kolo Kyari, said that the proceeds of the facility have been made available to the federal government as one of the strategies for improving macroeconomic stability.

“The participation of global, international, and regional syndication firms is a further testament to the lending market’s appetite for financing sponsored by NNPC and signifies solid market confidence in Nigeria,” Kyari said.

SOURCE: thequesttimes.com

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