THE Nigerian National Petroleum Company Limited (NNPCL) said its $1 billion loan backed by crude oil helped the Dangote Refinery to come on stream.
The NNPCL chief corporate communications officer, Olufemi Soneye, stated this at the Energy Relations Stakeholders Engagement in Abuja on Monday, December 16, according to a Punch report.
“A strategic decision to secure a $1 billion loan backed by NNPC’s crude was instrumental in supporting the Dangote Refinery during liquidity challenges, paving the way for the establishment of Nigeria’s first private refinery.
“This initiative underscores NNPC’s dedication to fostering public-private partnerships that drive national development,” he was quoted to have said.
Soneye, however, did not give details of the $1 billion the NNPCL secured on behalf of Dangote Refinery, nor the terms of the agreement and modalities for payment.
He further hinted that the state-owned oil company facilitated a $3.3 billion Gazelle loan as a critical intervention to help stabilise the federation’s foreign exchange crisis.
The ICIR recalls that in January this year, the NNPCL revealed having a syndicated $3.3 billion crude oil prepayment facility in partnership with the African Export-Import Bank (Afreximbank).
This organisation reported that there were unanswered questions about the NNPCL $3.3 billion crude-for-cash loan from Afreximbank.
The NNPCL had sought to stabilise the Nigerian currency with the facility but drew experts’ concerns about some pitfalls.
Despite the crude-for-cash arrangement, the naira continued to depreciate against the dollar, falling from about N960 per dollar in January to N1,500 in December.
The bank said the deal was the largest crude-backed facility in Nigeria and one of the largest syndicated debts raised in Africa.
At the time, the chief executive officer of Financial Derivatives Company Limited, Bismarck Rewane, expressed worry about such arrangements by the NNPCL, adding that the naira had been under pressure despite the arrangements.
“In all due respect, that will not solve the problem of the naira. The naira is still under pressure and is trading at about N1,350/$ this morning, the lowest point it has gone to in many years,” he said.
Also, the co-founder of Dairy Hills, Kelvin Emmanuel, expressed concerns over the high risk of resource-backed loans.
“I am not a fan of resource-backed loans, and this forward sales agreement that is akin to the financialisation of future oil and gas assets is an anomaly in statecraft that the National Assembly should fight with all rigour.
“There is no genius in it; it is a lazy approach to getting dollars to improve your balance of payment position,” he said.