In a collaborative effort, the African Export-Import Bank (Afreximbank) and the United Bank for Africa (UBA) have successfully disbursed $2.25 billion of the $3.3 billion oil-for-cash loan facility arranged by the Nigerian National Petroleum Company Limited (NNPCL). This significant financial milestone was confirmed in a statement released by UBA over the weekend.
As the Local Arranger and Onshore Account Bank for the transaction, UBA disclosed that an initial disbursement of $2.25 billion has been completed, and a second tranche of $1.05 billion is anticipated to follow shortly. The five-year facility, with a margin of 6.0 percent per annum above the three-month secured overnight financing rate, demonstrates a commitment to fostering economic stability.
The transaction structure includes an embedded price balance mechanism, where 90 percent of excess cash from the sale of committed barrels will be released to the borrower after debt service. The remaining 10 percent will be allocated to repaying the facility, effectively shortening the final maturity and unlocking cash flow from future pledged cargoes for Nigeria’s use.
Commenting on the successful financial close, Professor Benedict Oramah, President and Chairman of the Board of Directors at Afreximbank, emphasized the bank’s dedication to supporting African economies during challenging times. He expressed gratitude to partners and investors for their swift commitment to the funds, ensuring timely support for Nigeria’s economic stability.
Mele Kolo Kyari, the Group Chief Executive Officer of NNPCL, highlighted that the facility’s proceeds have been directed towards the federal government, contributing to strategies aimed at enhancing macroeconomic stability. He commended the participation of global, international, and regional syndication firms, interpreting it as a vote of confidence in Nigeria’s market.
This collaborative effort signifies a powerful synergy between financial institutions and the national petroleum sector, reflecting a shared commitment to economic development and trade advancement in Nigeria.