Nigeria is poised to receive the balance of $1.05 billion from a $3.3 billion Afreximbank loan backed by oil revenues, with expectations of revitalizing the economy and bolstering foreign currency availability in the domestic exchange market.
Denys Denya, Senior Executive Vice-President for Finance, Administration, and Banking at Afreximbank, confirmed that the bank has completed the verification process for crude availability and anticipates releasing the balance by the end of May.
“The verification of the crude availability has happened, so we expect in the next month to finalize the release of the balance. Based on future production, you get the money now,” Denya stated.
This remaining amount constitutes the balance of a $3.3 billion prepayment scheme initiated by the African Export-Import Bank. The loan will be repaid through crude oil shipments from the National Petroleum Co.
Background:
In August, following the removal of fuel subsidies and the unification of the forex market, which significantly weakened the naira, the federal government, through the National Nigerian Petroleum Company Limited (NNPCL), secured a $3.3 billion loan from Afreximbank to address liquidity challenges in the market.
The NNPCL clarified earlier that the loan would bolster foreign exchange reserves and offer an urgent solution to the country’s FX difficulties.
In December, multiple reports confirmed Nigeria’s receipt of the first tranche of $2.5 billion, with the balance anticipated to be paid subsequently.
Repayment Plan:
Furthermore, the federal government outlined that the loan would be repaid with crude oil priced at $65 per barrel and earmarked approximately 90,000 barrels of crude oil for this purpose.
The NNPCL has emphasized that the loan agreement will not significantly impact future government revenues from oil sales.
This injection of funds is expected to provide a much-needed boost to Nigeria’s economy, strengthen foreign currency reserves, and contribute to addressing prevailing challenges in the forex market.
