The African Export-Import Bank (Afreximbank) and the United Bank for Africa (UBA) have successfully disbursed an initial $2.25 billion of the $3.3 billion oil-for-cash loan facility arranged by the Nigerian National Petroleum Company Limited (NNPC). This significant financial transaction aims to support Nigeria’s economic stability and enhance access to import financing for raw materials and essential goods, fostering industrialization and trade development efforts.
As the Local Arranger and Onshore Account Bank for the transaction, UBA confirmed the disbursement in a statement over the weekend. The remaining $1.05 billion is expected to be disbursed in a second tranche subsequently. The five-year facility carries a margin of 6.0 per cent per annum above the three-month secured overnight financing rate.
The transaction structure includes an embedded price balance mechanism, ensuring that 90 per cent of all excess cash from the sale of the committed barrels (after debt service) will be released to the borrower. The remaining 10 per cent will be utilized to repay the facility, effectively shortening the final maturity of the loan and freeing cash flow from future pledged cargoes for Nigeria’s use.
Commenting on the successful financial close, Afreximbank President and Chairman of the Board of Directors, Professor Benedict Oramah, emphasized the institution’s commitment to supporting African economies during challenging times. Oramah highlighted that the initial $2.25 billion disbursement will contribute to Nigeria’s long-term economic stability, easing access to import financing for essential goods and raw materials.
NNPCL Group Chief Executive Officer, Mele Kolo Kyari, expressed gratitude for the swift commitment of funds by global, international, and regional syndication firms. He stated that the proceeds from the facility have already been made available to the federal government, strategically contributing to the improvement of macro-economic stability. Kyari noted that the widespread participation underscores market confidence in Nigeria’s economic initiatives, showcasing solid support from partners and investors.
