(AGENDAWATCHDOG) – Nigeria’s crude oil production capacity has been boosted by the United Bank for Africa, UBA, Plc, via a $200 million facility, which is part of a $1.5 billion Pre-Export Finance Facility provided by consortium of Nigerian commercial and international banks, with UBA as the lead arranger, for the Nigerian National Petroleum Corporation, NNPC, and its upstream subsidiary, the Nigerian Petroleum Development Company, NPDC.
While disclosing details of the deal, via a statement, the UBA revealed that it will make $200 million available to support investment growth and liquidity requirements, with a view to helping boost NNPC’s production capacity, which is crucial to the Nigerian economy, being its major source of foreign exchange earnings.
Excerpts of the statement read:
“UBA’s position as Lead Arranger recognises the Group’s strength in structuring and deploying financing to the oil and gas sector, and the depth and liquidity of the Group’s balance sheet.
“The $1.5 billion facility is structured in two tranches. The first tranche of $1 billion, to be repaid over a period of five years, will be provided in dollars, with UBA acting as the Facility Agent Bank.
“The second tranche of $500 million, will be provided in local currency, over seven years, with UBA acting as Lead Bank, providing $200 million in naira equivalent.
“Both facilities will be repaid from an allocation of 30,000 barrels per day of NPDC’s crude oil. UBA has a strong track record in the resources sector across Africa, having facilitated oil prepayment deals with the NNPC, including its 2013 $100 million participation in the PXF Funding Limited transaction, and a further $60 million in the 2015 Phoenix Export Funding Limited transaction.
“In Senegal, UBA was responsible for the EUR 240 million revolving crude oil financing facility for the Société Africaine de Raffinage and in Congo Brazzaville co-funded the $250 million crude oil prepayment facility for Orion Oil Limited.
“Other participants in the NNPC deal include Standard Chartered Bank, Afrexim Bank, Union Bank and two oil trading companies, Vitol and Matrix.”
Speaking on this development, UBA Group Chairman, Tony O. Elumelu stated “This has been one of the most economically challenging years that Nigeria has witnessed.
“With the sharp drop in the price of oil and the ensuing hardship that followed the onset of the Covid-19 pandemic, the private sector must come together and contribute meaningfully to the economy.”
POTENTIAL IMPACT: The facility will provide crucial capital for investment in NNPC’s production capacity, which is of strategic significance to the Nigerian economy and the country’s leading source of foreign exchange earnings.