Nigeria’s National Economic Council (NEC) has approved a $4.5 billion oil-backed financing arrangement for NNPC Limited as the Federal Government moves to strengthen the country’s external reserves, improve liquidity and release additional resources for critical national priorities.
The new financing structure, known as Project Gazelle 2, will refinance part of NNPC’s existing pre-export finance facility while providing billions of dollars in additional liquidity to the Nigerian economy.
Under the arrangement, approximately $1.5 billion outstanding from the original $3.3 billion Project Gazelle facility secured in 2023 will be refinanced.
The transaction is also expected to unlock an additional $3 billion in fresh liquidity, providing the government with greater financial flexibility at a time when it is seeking to strengthen foreign exchange buffers and increase investment in infrastructure.
The facility forms part of broader efforts by the administration of President Bola Tinubu to improve Nigeria’s financing position following a series of economic reforms aimed at stabilising the economy and attracting foreign capital.
Nigeria’s external reserves remain particularly important to the government’s economic strategy because stronger reserves can improve the Central Bank of Nigeria’s capacity to manage foreign exchange liquidity and support confidence in the naira.
The government also expects the refinancing structure to provide better terms than the original Project Gazelle transaction.
Finance Minister Taiwo Oyedele told NEC that the volume of crude oil committed to servicing the financing would decline by 12.5 percent to approximately 78,750 barrels per day, compared with 90,000 barrels per day under the previous arrangement.
The reduction means fewer barrels of Nigeria’s crude production will be tied to the financing facility, potentially allowing additional oil volumes and associated revenues to be directed toward other government priorities.
The improved structure is expected to provide greater flexibility for infrastructure investment and other fiscal commitments while refinancing NNPC’s outstanding obligation.
The original Project Gazelle was structured as a crude oil-backed pre-export finance facility, allowing NNPC to raise foreign currency against future oil production.
Such arrangements provide immediate dollar liquidity but commit a portion of future crude production or export proceeds toward repayment.
Project Gazelle 2 therefore seeks to restructure the existing obligation while simultaneously generating additional financing without proportionately increasing the volume of crude committed to repayment.
The transaction comes as Nigeria continues efforts to increase oil production and strengthen petroleum export earnings, which remain an important source of foreign exchange for Africa’s largest crude producer.
Higher production would provide additional room for the government and NNPC to meet financing obligations while maintaining crude volumes available for conventional exports and domestic refining.
Vice President Kashim Shettima, who chairs the National Economic Council, said the ultimate measure of the government’s economic policies would be their effect on the living conditions of Nigerians, particularly food costs, healthcare, education and household welfare.
The government expects the additional liquidity from Project Gazelle 2 to complement ongoing reforms designed to improve Nigeria’s fiscal position and create greater room for investment in productive sectors of the economy.
With $3 billion in additional liquidity expected from the $4.5 billion facility, the transaction could also provide near-term support for Nigeria’s external reserves while reducing the crude commitment attached to NNPC’s oil-backed financing.
The effectiveness of the arrangement will ultimately depend on Nigeria’s ability to sustain higher crude production, strengthen export earnings and ensure that resources released through the refinancing are deployed toward infrastructure and other productive investments.
