Nigeria Secures Remaining $1.05 Billion from Afrexim Bank’s Oil-Backed Loan
Nigeria is set to receive the remaining $1.05 billion from a $3.3 billion loan facility provided by the African Export-Import Bank (Afrexim Bank), backed by oil revenues. The disbursement of the balance is expected by the end of May, aimed at revitalizing the economy and enhancing the availability of foreign currency in the domestic exchange market.
Denys Denya, the Senior Executive Vice-President for Finance, Administration and Banking at Afrexim Bank, confirmed that the bank has verified the availability of crude oil and will release the remaining funds next month. He stated, “The verification of the crude availability has happened, so we expect in the next month to finalize the release of the balance. Based on future production, you get the money now.”
The $3.3 billion prepayment scheme, structured by Afrexim Bank, will be repaid through crude oil shipments from the Nigerian National Petroleum Company Limited (NNPCL).
Background:
In August 2023, following the removal of fuel subsidies and the unification of the foreign exchange market, which significantly weakened the naira, the Nigerian government, through the NNPCL, secured the $3.3 billion loan from Afrexim Bank to bolster liquidity in the market.
The NNPCL had earlier explained that the loan would be used to shore up the foreign exchange reserves and provide an urgent solution to the country’s foreign exchange challenges.
In December 2023, multiple reports confirmed that Nigeria received the first tranche of $2.5 billion, with the balance expected to be paid later.
Repayment Plan:
The federal government has noted that the loan will be repaid with crude oil priced at $65 per barrel, and approximately 90,000 barrels of crude oil have been earmarked for the repayment process.
The NNPCL has stated that the loan agreement will not have a significant impact on future government revenues from oil sales.
As Nigeria secures the remaining $1.05 billion from the oil-backed loan facility, the government aims to bolster the economy and address the foreign exchange challenges faced by the nation.
