NNPC to boost upstream operations with $1bn funding

NNPC to boost upstream operations with $1bn funding

The Nigerian National Petroleum Corporation (NNPC) on Thursday, September 3, revealed that it had secured a prepayment funding of around $1 billion; in order to boost the upstream operations of its subsidiary, the Nigerian Petroleum Development Company (NPDC).

This was contained in a statement issued by Kennie Obateru, its spokesperson.

NNPC said the crude oil prepayment had helped it meet its NPDC’s tax payment obligation estimated at about $700 million to the Nigerian government; while the balance had been committed to finance NPDC’s capital and also operating expenditure.

The corporation further stated that the prepayment financing would be backed by future oil production of NPDC.

It also added that it would adopt a well-established structure to enable the buyer of the crude, Eagle Export Funding Limited; to source financing in the domestic as well as international markets in order to fund an upfront payment to NNPC under a Forward Sale Agreement.

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The financing, which funded the prepayment, is structured over two tranches namely: five-year USD amortising tranche (Tranche 1); and also a seven-year NGN amortising tranche (Tranche 2).

The two tranches benefit from a cash sweep; with the seven-year tranche having a one-year non-call period.

Repayment, the NNPC said, would come from the sales proceeds of the NPDC crude; which are backed by Letters of Credit, issued by banks with a minimum credit rating; in line with market precedent.

The export price for the crude is the relevant NNPC Official Selling Price for the corresponding calendar month; and also crude gauge.

Participants in the Eagle Export Funding Limited deal include Standard Chartered Bank; United Bank for Africa; Union Bank; Afrexim Bank; as well as two oil trading firms, Vitol and Matrix Energy.

Meanwhile, the Nigerian Customs Service (NCS) on Friday, September 4, confirmed that four firms have been issued emergency approval by the Central Bank of Nigeria (CBN) to import 262,000 tons of maize into the country.

This was contained in a memo issued by the NCS Deputy Comptroller General, T.M Isa.

“In line with the government’s policy on food security, sufficiency, and striking a balance between food imports and local production capacities to meet the anticipated shortfall, the CBN has granted approval for the underlisted companies to import maize in the quantities stated below,” the memo reads.

The firms comprise Crown Flour Mills Limited, Premier Feeds Company Limited, Chi Farms Limited, and Wacot Limited.

This decision by the CBN comes in the wake of a policy shift; barring the importation of maize in a move aimed at self-sufficiency and conservation of the foreign exchange spent annually in bringing the commodity into the country.

Banks are to conduct the transactions with the companies’ names; and the quantity each of them is approved to import, the NCS memo said.

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