The Nigerian National Petroleum Company Limited, has announced that it had secured a $3bn emergency crude oil repayment loan from the African Export-Import Bank.
It said the loan would be used by the oil company to support the Federal Government in stabilising Nigeria’s exchange rate.
It was also gathered that the facility would also help in reducing the pump price of Premium Motor Spirit, popularly called petrol.
Impeccable sources at the oil firm also told our correspondent that the loan would boost the imports of petrol into Nigeria, as oil marketers further confirmed that the facility would tackle the seeming re-emergence of subsidy on petrol.
Nigeria’s exchange rate has been an issue of concern lately, with the dollar rising to over N910 at the parallel market, while oil dealers have been complaining of non-liquid nature of the Importers’ and Exporters official window of the Central Bank of Nigeria.
The NNPCL announced the acquisition of the $3bn loan in a brief statement issued by the company in Abuja, which was titled, ‘Relief for the naira: NNPC Ltd secures $3bn emergency crude repayment loan from AFREXIM Bank.’
The statement read, “The NNPC Ltd and @afreximbank have jointly signed a commitment letter and term-sheet for an emergency $3bn crude oil repayment loan.
“The signing, which took place today at the bank’s headquarters in Cairo, Egypt, will provide some immediate disbursement that will enable the NNPC Ltd to support the Federal Government in its ongoing fiscal and monetary policy reforms aimed at stabilising the exchange rate market.”
Providing further explanation about the loan, the Senior Special Assistant to President on Digital/New Media, O’tega Ogra, in several posts on X (formerly Twitter), explained that the $3bn was not a crude-for-refined products swap loan, but an upfront cash loan against proceeds from a limited amount of future crude oil production.
He said, “Is this loan risky for NNPCL or the Nigerian Treasury? No. The exposure for NNPCL is very limited, covering just a fraction of their entitlements. Additionally, there are no sovereign guarantees tied to this loan.
“What’s the benefit of this loan to Nigeria? The loan will assist NNPCL in settling taxes and royalties in advance. It will also equip the Federal Government with the necessary dollar liquidity to stabilise the naira, with limited risk.
“How will the loan be disbursed? The funds will be released in stages or tranches based on the specific needs and requirements of the Federal Government.”
On whether the initiative would affect fuel prices, Ogra said, “A strengthened naira as a result of this initiative will lead to a reduction in fuel costs. This means that if the naira appreciates in value, the cost of fuel will drop and further increases will be halted.”
He continued, “What about subsidies? Are they coming back? No. A stronger naira will result in lower prices from the current level, making subsidies unnecessary. The deregulation policy remains unchanged.
“How will the loan be repaid? The loan will be repaid against a fraction of proceeds from future crude oil production. It’s a strategic move that ensures a balance between our current economic needs and future production capabilities.
“What is the difference between this and previous swap deals? This is not a crude for refined products agreement where the government does not earn any proceeds from the swap.”
Atiku kicks
Former Vice President and presidential candidate of the Peoples Democratic Party in the 2023 election, Atiku Abubakar has described the $3bn loan injected into the economy by the Nigerian National Petroleum Company Limited to stabilise the naira as fraudulent.
Speaking through his Special Assistant on Public Communications, Mr Phrank Shaibu in a statement on Wednesday, Atiku described the purpose given for the loan as a ruse to force the naira to appreciate in the parallel market.
He further added that the move was cosmetic and unimaginative and had once again “Exposed President Bola Tinubu as a Lilliputian economist that lacked ideas on how to rescue the economy he had pushed to the edge with unviable policies.”
According to him, monetary policy is not the job of the NNPCL but the Central Bank of Nigeria and wondered why the former, “Which claimed to be a profit-making organisation, would go ahead to take a loan for the primary purpose of stabilising the naira.
Atiku also drew parallels between the actions of the NNPCL and the CBN under the authority of Godwin Emefiele.
He also claimed that oil production has dropped on Tinubu’s watch due to continuous oil theft, stressing that instead of boosting forex liquidity by increasing production and exports, “The President decided to take the jejune path of obtaining foreign loans, an inglorious road that his predecessor had travelled.
He said, “For many years, Tinubu claimed that he built the economy of Lagos from scratch. Now, he has been exposed as a charlatan. His administration detained Emefiele and vilified him for taking FX loans from JP Morgan and Goldman Sachs running into $7.5bn, which was used in defending the naira.
“Now, Tinubu’s administration claims to have done the same thing by forcing the NNPCL to take a loan of $3bn to defend the naira. We, however, have it on good authority that this is all a ruse to force the naira to appreciate at the parallel market, an action that will further affect the government’s credibility.
“The NNPCL has failed to shed the toga of an ordinary government agency. No wonder it has refused to become a public limited liability company, as stated in the Petroleum Industry Act. The NNPCL boss, Mele Kyari, who is also desperate to retain his job, has allowed himself to become a willing political tool just like Emefiele. If the NNPCL was a publicly listed oil firm like Aramco and Mobil, would it obtain a loan in order to ‘defend the naira’?”
He chided Tinubu for lacking a clear economic blueprint, arguing that his policy flip-flops had already begun affecting Nigerian bonds, as reported by Bloomberg.
