The Nigerian National Petroleum Company, NNPC Limited and the African Export-Import Bank has jointly signing a commitment letter and term sheet for an emergency $3 billion crude oil repayment loan.
This came at a time some experts and analysts have said investors were losing confidence in the body language of President Bola Tinubu and those around him, especially in what they called “policy summersaults” after the initial decision to altogether remove fuel subsidy and encumbrances around the naira.
The naira nearly clocked 1000 to a dollar within the week as fuel suppliers contemplate increasing the cost of the product which currently sells at N617/litre.
The NNPC’s agreement signing with Afreximbank, which took place yesterday at the bank’s headquarters in Cairo, Egypt, will provide some immediate disbursement that will enable the NNPC to support the federal government in its ongoing fiscal and monetary policy reforms aimed at stabilizing the exchange rate market.
Two months after trading restrictions were loosened on the official market, Nigeria has been looking to shore up its reserves and stem the fall of its currency, which has hit a record low on the black market.
Speaking on the intervention, the Senior Special Assistant to President Tinubu on Digital and New Media, Otegra Ogra, said the loan is not a crude-for-refined products swap but an upfront cash loan against proceeds from a limited amount of future crude oil production.
He tweeted that the loan wasn’t a risk for NNPC or the Nigerian treasury and that the exposure for the oil company was very limited, covering just a fraction of their entitlements and therefore, there were no sovereign guarantees tied to it.
He noted that the loan will assist the NNPC in settling taxes and royalties in advance.
He also said it would equally equip the federal government with the necessary dollar liquidity to stabilize the naira with limited risk
