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The Nigerian National Petroleum Company Limited (NNPCL) has secured a $3bn emergency loan to support the naira and stabilise the foreign exchange market.
According to the NNPCL, the crude repayment loan will be facilitated by the African Export-Import Bank (Afreximbank).
The NNPC Group Chief Executive Officer, Mele Kolo Kyari, signed on the dotted lines for the crude-for-cash funding with Afreximbank's Executive Vice President, George Elimbi at the bank's Headquarters in Cairo, Egypt.
This was contained in a terse statement released by the national oil company on Wednesday, August 16, 2023.
Though details of the facility remain sketchy at this time, Pulse learnt that the NNPCL would repay the loan with crude oil at an interest not more than 11%.
“The NNPC Ltd. and AfriEXIM bank have jointly signed a commitment letter and Termsheet for an emergency $3 billion 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 stabilizing the exchange rate market,” the NNPCL statement read.
This move is part of the Federal Government's efforts to ease the burden on the local currency, which had plummeted significantly against the dollar in the last couple of weeks.
The naira depreciated to its record lowest on Friday, August 11, 2023, closing the week at ₦950 to the dollar at the parallel market, leading to speculations that the fuel pump price will be increased.
This development prompted a meeting on Monday between President Bola Tinubu and the acting Central Bank Governor, Folashodun Sonubi, who announced that the apex would roll out plans to arrest the downward slide of the local currency.
Meanwhile, the naira had a mini-resurgence on Wednesday, recovering from ₦950 per dollar to ₦890 to the greenback.
This crude-for-cash loan will provide the NNPCL with the resources needed to import refined fuel into the country without putting pressure on the nation's reserve. In turn, this will help to stabilise the fuel pump price.