THE Federal Government has concluded arrangements to receive a $1.05 billion syndicated loan backed by oil from the African Export-Import Bank (AfreximBank) towards the end of May 2024.
Through this loan, Nigeria’s foreign exchange reserve is expected to grow further from the current $33.34 billion as the Central Bank of Nigeria (CBN) embarks on reforms to manage the country’s currency market.
The loan is part of the $3.3 billion “pre-export finance facility” facilitated by the Nigerian National Petroleum Company (NNPC) Ltd and arranged by the African Export-Import Bank (Afreximbank) in January 2024.
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Nigeria has pledged 164.25 million barrels of crude oil at 90,000 barrels per day from 2024 to repay the loan.
Commenting on the loan on Monday, Denys Denya, senior executive vice president for finance, administration, and banking at Afreximbank, said: “The verification of the crude availability has happened, so we expect in the next month to finalise the release of the balance. Based on future production, you get the money now.”
He said the facility had participation from commercial banks and oil traders, most of which have already secured internal approvals.
Also, Denya said the firm was finalising a $200 million funding plan that includes guarantees and letters of credit to support the East African crude oil pipeline linking Uganda’s oil fields to Tanzania’s port of Tanga.
The project, which is estimated to cost $5 billion, has received criticism from climate activists who have successfully persuaded lenders and insurers to steer clear of the pipeline.
Denya said the construction of the 1,443-kilometer (897-mile) pipeline was targeted at improving intra-regional trade “which is part of our mandate, so it ticks all the boxes for us. There’s no reason for us not to be supporting this.”
He added that the investments would complement Afreximbank’s plans to increase loans and advances by 53 percent to $40 billion by the end of 2024.
The ICIR reported on concerns and high risks of the government’s reliance on resource-backed loans, especially oil.
“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 rigor,” Emmanuel, the chief executive officer of Dairy Hills said on X.
“There is no genius in it; it is a lazy approach to getting dollars to improve your balance of payment position,” he added.
Harrison Edeh is a journalist with the International Centre for Investigative Reporting, always determined to drive advocacy for good governance through holding public officials and businesses accountable.