- The crude oil prepayment facility aims to alleviate acute foreign exchange (FX) shortage, enhance economic activities and restore investor confidence in Nigeria.
- UBA played a pivotal role as the Local Arranger and Onshore Account Bank for the transaction, sponsored by NNPC.
The African Export-Import Bank (Afreximbank) has confirmed the initial disbursement of $2.25 billion out of the approved $3.3 billion crude oil prepayment facility for Nigeria. The facility aims to alleviate the acute foreign exchange (FX) shortage, enhance economic activities and restore investor confidence in Nigeria. Afreximbank announced the successful initial disbursement of $2.25 billion, with a second tranche of $1.05 billion expected to follow.
The United Bank for Africa Plc (UBA) played a pivotal role as the Local Arranger and Onshore Account Bank for the transaction, sponsored by the Nigerian National Petroleum Company Limited (NNPCL). The facility, a significant step in resolving FX backlogs, received assurance from President Bola Tinubu in December. The five-year facility, structured with a six per cent per annum margin above the three-month secured overnight financing rate (SOFR), includes an embedded price balance mechanism.
This mechanism allows 90 per cent of excess cash from the sale of committed barrels to be released to the borrower, with the remaining 10 per cent used to repay the facility. The participating lenders in the landmark financing include Afreximbank, Gunvor International BV, and Sahara Energy Resources Limited. Described as the largest syndicated loan ever raised by Nigeria in the international market, this transaction signifies a substantial vote of confidence in Nigeria and Africa.
Afreximbank’s President, Prof. Benedict Oramah, emphasised the bank’s commitment to supporting African economies in challenging times. He said the disbursement aims to enhance Nigeria’s long-term economic stability, facilitate access to import financing, and support industrialisation and trade development.