The African Export-Import Bank (Afreximbank) has announced an additional $925 million disbursement for the Nigerian National Petroleum Company Limited’s (NNPC) $3.3 billion syndicated crude oil-backed prepayment facility.
This latest funding, aimed at Project Gazelle Funding Limited, increases the total currently funded facility size to $3.175 billion.
Afreximbank arranged and coordinated this accordion disbursement, raising the funds from a consortium of crude oil off-taker lenders, including Oando Group and Sahara Energy Resource Limited.
Afreximbank, serving as the mandated lead arranger, technical and modeling bank, bookrunner, facility agent, offshore account bank, intercreditor agent, and collateral agent, highlighted the transaction’s significance in supporting Nigeria’s macroeconomic stability, long-term economic growth, industrialization, and trade development.
This follows the success of the first accordion tranche of the $3.3 billion facility, which secured $2.25 billion in December 2023. The $925 million increase now brings the total disbursed amount to $3.175 billion.
Prof. Benedict Oramah, President and Chairman of the Board of Directors of Afreximbank, praised the milestone, stating, “This achievement demonstrates the bank’s capabilities as a crucial development partner for Africa.
It reaffirms our commitment to assisting member states in their economic growth and stability. This funding will significantly support Nigeria’s economic development priorities.”
Oramah described the original facility as a landmark, being the largest crude oil-backed facility in Nigeria and one of the largest syndicated debts raised in Africa.
He noted that the positive market appetite for well-structured, commodity-backed instruments was evident in the successful closure of the first accordion.
NNPC Limited’s Group Chief Executive Officer, Mele Kyari, commended Afreximbank for its investment philosophy and interest in fostering prosperity.
He emphasized the importance of the successful disbursement under Project Gazelle and highlighted investors’ confidence in NNPC and Nigeria’s growth aspirations.
Kyari assured Afreximbank and the investing community of NNPC’s commitment to growing the nation’s hydrocarbon resources and strengthening partnerships in the oil and gas sector both locally and globally.
On August 17, 2023, The Punch reported that NNPC had secured a $3.3 billion emergency crude oil repayment loan from Afreximbank to support the federal government in stabilizing Nigeria’s exchange rate.
In January 2024, The Punch also reported that NNPC planned to prepay future royalties and taxes to the Federal Government from the $3.3 billion financing deal.
NNPC detailed the agreement in a document titled “Frequently Asked Questions: Project Gazelle,” released by its Chief Corporate Communications Officer, Olufemi Soneye.
The company adopted a lower price benchmark of $65 per barrel for the $3.3 billion crude-for-cash loan to minimize the risk of default and ensure financial stability.
It reserved up to 90,000 barrels of crude for Project Gazelle, ensuring sufficient cash flow for repayment and other financial obligations.
This conservative pricing approach provides a safety margin against future price fluctuations. If oil prices rise, faster repayment is possible; if they fall, the repayment may be slower.
The quantity of crude earmarked ensures enough cash is available for repayment and other obligations, considering the expected global price of crude oil.
NNPC’s strategic repayments are tied to future oil sales, mitigating risks from price volatility through conservative pricing in oil sales contracts.
