The African Export-Import Bank (Afreximbank) has announced an additional $925 million disbursement to Nigeria under a $3.3 billion crude oil-backed prepayment facility arranged for the Nigerian National Petroleum Company Limited (NNPCL).
This latest disbursement for Project Gazelle Funding Limited brings the total funded facility size to $3.175 billion.
Afreximbank, acting as the Mandated Lead Arranger, among other roles, coordinated the accordion arrangement, securing the $925 million from a consortium of crude oil off-taker lenders, including Oando Group and Sahara Energy Resource Limited.
In a statement, Afreximbank emphasized that this funding aims to support Nigeria’s macroeconomic stability, long-term economic growth, and industrialization efforts. The announcement follows the initial success of the facility, which received $2.25 billion in commitments in December 2023, and brings the total disbursement to $3.175 billion.
Prof. Benedict Oramah, President and Chairman of the Board of Directors of Afreximbank, remarked, “This milestone demonstrates our commitment to supporting our member states’ economic growth and stability. This funding will significantly aid Nigeria in achieving its development goals.”
Describing the original facility as a landmark, Oramah highlighted its status as the largest crude oil-backed facility in Nigeria and one of Africa’s most substantial syndicated debts. He noted that the successful closure of the first tranche indicated strong market confidence in well-structured, commodities-backed instruments.
NNPCL’s Group Chief Executive Officer, Mele Kyari, praised Afreximbank for its investment philosophy and commitment to co-creating prosperity. Kyari reassured investors of NNPCL’s dedication to expanding Nigeria’s hydrocarbon resources and strengthening partnerships within the oil and gas sector.
Previously, in August 2023, NNPCL secured a $3.3 billion emergency crude oil repayment loan from Afreximbank to help stabilize Nigeria’s exchange rate. In January 2024, NNPCL announced plans to prepay future royalties and taxes to the Federal Government using funds from the financing deal.
The company revealed in a document, “Frequently Asked Questions – Project Gazelle,” that the loan agreement was designed to prepay future royalties and taxes, with a conservative crude price benchmark of $65 per barrel to minimize default risks. NNPCL has allocated up to 90,000 barrels of crude for Project Gazelle to ensure sufficient cash flow for repayment and financial stability, adapting repayment strategies to oil price fluctuations.
Overall, NNPCL’s strategic planning and conservative pricing in oil sales contracts aim to mitigate risks associated with oil price volatility, ensuring stable financial obligations and contributing to Nigeria’s economic resilience.