NNPCL to use $3.3 Billion Afrexim Loan for Royalties and Taxes

NNPC to Prepay Future Royalties and Taxes from $3.3 Billion Financing Deal with African Export-Import Bank
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The Nigerian National Petroleum Company Limited (NNPCL) announced on Sunday its intention to prepay future royalties and taxes to the Federal Government, utilizing the $3.3 billion financing deal secured from the African Export-Import Bank last year.

This information was revealed in a document titled 'Frequently Asked Questions – Project Gazelle,' released by Olufemi Soneye, the Chief Corporate Communications Officer of NNPCL, on Sunday night.

On August 17, 2023, reports surfaced that NNPCL had successfully secured a $3.3 billion emergency crude oil repayment loan from the African Export-Import Bank. The company clarified that the purpose of the loan was to assist in stabilizing Nigeria's exchange rate, supporting the Federal Government in this endeavor.

Expanding on the details of the deal in the Sunday night document, the oil company stated, "Everything you need to know about the NNPC Limited’s $3.3 billion loan, also known as Project Gazelle."

“There has been a lot of interest from the public and stakeholders in recent weeks regarding the $3.3bn crude oil pre-payment loan, also known as Project Gazelle. This is a financing agreement secured by NNPC Limited to prepay future royalties and taxes to the Federal Government.”

The company also stated that it adopted a lower price benchmark for the $3.3bn crude-for-cash loan to reduce the risk of default and ensure financial stability.

Giving details on the benchmark oil price, the company said the facility was using a conservative crude price of $65/barrel to calculate the allocated crude to be produced and sold in the future.

Brent, the global benchmark for crude, is currently at about $78/barrel.

Commenting on the benchmark oil price of $65/barrel for the $3.3bn deal, the national oil firm said, “This provides a safety margin for price fluctuations in the future.

“NNPC Limited has reserved up to 90,000 barrels of crude for Project Gazelle, ensuring sufficient cash flow for repayment and other financial obligations.

“If oil prices rise, more money will come in from selling the 90,000 barrels, allowing for faster repayment. However, if oil prices fall, the repayment may be slower.

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