The Nigerian National Petroleum Company (NNPC) has secured $5 billion from the African Export-Import Bank (Afreximbank).
Having secured the fund, the West African state-owned energy firm is expected to use the fund to buy and manage oil and gas assets in the upstream sector.
A summary of a meeting between Benedict Oramah, the Afreximbank, and Mele Kyari, the Managing Director of NNPC, read that the Cairo-based lender agreed to take on a “financial advisory and fundraising mandated lead arranger role.”
BizWatch Nigeria understands that the repayment of the fund would be done through a forward sale arrangement (FSA) whereby the funds provided will constitute the payment purchase of 30-60kpd of crude to be delivered to the lender over a period.
The repayment of the fund is projected to be made within a four to eight-year period to ensure fiscal obligations and operating expenses are discharged appropriately.
This development is a major milestone for NNPC in its quest to scale up investments in the oil and gas sector following the starting of the implementation of the Petroleum Industry Act (PIA), which was designed to rebalance its portfolio and sed off some of its toxic assets.
What you should know about the PIA
As earlier published on this platform, to reform Nigeria’s oil and gas sector, with the aim of creating an environment more conducive for the growth of the sector and addressing legitimate grievances of communities most impacted by extractive industries, the federal government introduced the PIA.
The PIA, which was recently assented and signed into law by President Muhammadu Buhari to repeal the extant Petroleum Act 2004, has created an array of provisions and innovations that would affect the private, public sector, and stakeholders in the oil and gas industry.
Amongst other things, the act was enacted to provide for the legal, governance, regulatory, and fiscal framework for the Nigerian Petroleum Industry, the establishment, and development of host communities, and other related matters in the upstream, midstream, and downstream sectors of the petroleum industry.