The African Export-Import Bank (Afreximbank) and the United Bank for Africa (UBA) have successfully disbursed $2.25 billion as part of a $3.3 billion oil-for-cash loan facility arranged by the Nigerian National Petroleum Company Limited (NNPCL).
This financial injection, marked by an initial disbursement, carries substantial implications for the nation’s economic resilience.
The Local Arranger and Onshore Account Bank for this transformative transaction, UBA, disclosed that the five-year facility bears a margin of 6.0 per cent per annum above the three-month secured overnight financing rate.
This strategic arrangement is poised to empower Nigeria economically and create opportunities for sustainable growth.
A notable aspect of the transaction structure is the embedded price balance mechanism, ensuring that 90 per cent of all excess cash generated from the sale of committed barrels will be released to the borrower, with the remaining 10 per cent allocated to repaying the facility.
This mechanism effectively accelerates the final maturity of the facility, freeing up cash flow from future pledged cargoes for use by Nigeria.
Commenting on the successful financial close, Afreximbank President and Chairman of the Board of Directors, Professor Benedict Oramah, emphasized the bank’s commitment to supporting African economies during critical periods.
He highlighted that the disbursement of the initial $2.25 billion under the facility aligns with Afreximbank’s dedication to fostering Nigeria’s long-term economic stability, facilitating access to import financing for essential goods and raw materials, and supporting industrialization and trade development efforts.
NNPCL Group Chief Executive Officer, Mele Kolo Kyari, acknowledged that the facility’s proceeds have been made available to the federal government, strategically contributing to enhancing macro-economic stability.
He emphasized that the global, international, and regional syndication firms’ participation underscores the lending market’s confidence in Nigeria and signifies a solid market endorsement for financing sponsored by NNPCL.
This collaborative effort between Afreximbank, UBA, and NNPCL stands as a testament to the financial community’s support for Nigeria’s economic growth.
The successful disbursement of the initial $2.25 billion from the oil-for-cash loan facility marks a pivotal milestone in fortifying the nation’s economic foundations and fostering sustainable development.
As Nigeria navigates the economic landscape of 2024, this financial infusion serves as a catalyst for prosperity and resilience.
