Oil-for-cash loan: Nigeria to get $1bn from Afreximbank

THE federal government has concluded arrangements to receive $1.05 billion syndicated loan backed by oil towards the end of May 2024.

The loan is part of the $3.3 billion “pre-export finance facility” facilitated by the Nigerian National Petroleum Company (NNPC) Ltd and arranged by the African Export-Import Bank (Afreximbank) in January 2024.

The government has pledged 164.25 million barrels of crude oil at 90,000 barrels per day from 2024 to repay the loan.

Commenting on the loan on Monday, Denys Denya, senior executive vice president for finance, administration and banking at Afreximbank, said:    “The verification of the crude availability has happened so we expect in the next month to finalize the release of the balance. Based on future production, you get the money now.”

He said the facility has participation from commercial banks and oil traders, most of which have already secured internal approvals.

Also, Denya said the firm is also finalising a $200 million funding plan that includes guarantees, and letters of credit to support the East African crude oil pipeline linking Uganda’s oil fields to Tanzania’s port of Tanga.

The project, which is estimated to cost $5 billion, has received criticism from climate activists who have successfully persuaded lenders and insurers to steer clear of the pipeline.

Denya, said the construction of the 1,443-kilometer (897-mile) pipeline is targeted at improving ‘intra-regional trade which is part of our mandate, so it ticks all the boxes for us there’s really no reason for us not to be supporting this’, adding that the investments will add to plans by Afreximbank to increase loans and advances by 53 percent to $40 billion by the end of 2024.