The federal government of Nigeria expects a $1.05bn syndicated loan back from the African Import Export (AFREXIM) Bank this coming month.
Afreximbank arranges the loan as part of the larger $3.3bn prepayment facility with the repayment terms attached to the Nigerian National Petroleum Company Ltd crude cargo.
In a statement released by Denys Denya, afreximbank’s Senior Executive Vice President for Finance, Administration, and Banking, he confirmed the availability of crude in exchange for the balance next month.
The FG plans to channel the loan to revive Nigeria’s economy and enhance the supply of local currency in the local foreign exchange market. However, a substantial portion of it — two-thirds, was already disbursed in January.
The loan is designated to provide enough funds for future oil production to raise hope for the country’s challenging times.
A report from the Nigerian National Petroleum Company Limited in January 2024 said the organization would prepay future royalties and taxes to the Federal Government from the $3.3bn deal sealed with the African Export-Import Bank last year.
This information was disclosed in a document titled “Frequently Asked Questions – Project Gazelle”, released by Olufemi Soneye, the Chief Corporate Communications Officer.
On August 17, 2023, the NNPCL announced that it had secured a $3.3bn emergency crude oil repayment loan from the African Export-Import Bank, and it will be used to support the government for a stable exchange rate.
The company also mentioned adopting a lower price benchmark for the $3.3bn crude-for-cash loan for financial stability and to reduce the risk of defaulting.
Considering the expected future, NNPCL has initiated conservative price metrics to meet other cash flow obligations.
NNPCL also said repayments strategically have been planned and tied to future oil sales, with conservative pricing in oil sales contracts mitigating the risks associated with oil price volatility.
