Nigeria to receive balance of $1.05 billion oil-backed Afrexim bank loan

Nigeria is set to receive the balance $1.05 billion from a $3.3 billion Afrexim bank loan backed by oil revenues by the end of May, aiming to rejuvenate the economy and enhance the availability of foreign currency in the domestic exchange market.

The Senior Executive Vice-President for Finance, Administration and Banking at Afreximbank, Denys Denya said the bank has verified the crude availability and would release the balance 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.”

This amount is the balance of a $3.3 billion prepayment scheme planned by the African Export-Import Bank, which will be repaid through crude oil shipments from the National Petroleum Co.,

Backstory

In August, following the removal of fuel subsidy and the unification of the forex market which significantly weakened the naira, the federal government through the NNPCL secured a $3.3 billion loan from Afrexim bank to shore up liquidity in the market.

The NNPCL explained earlier that the loan would be used to shore up the foreign exchange reserve and provides a more urgent solution to the country’s FX challenges.

In December, multiple reports confirmed Nigeria receiving first tranche of $2.5 billion with the balance expected to be paid later.

Repayment plan

Furthermore, the federal government noted that the loan would be paid with crude oil set a $65 per barrel and had earmarked around 90,000 barrels of crude oil for the process.

The National Nigerian Petroleum Company Limited (NNPCL) has stated that the loan agreement will not have a major impact on future government revenues from oil sales.