Africa Intelligence: NNPC Set to Finalise New $2 Billion Crude-backed Loan

•Fund meant to balance finances, boost oil output   

•National oil firm mute

Emmanuel Addeh in Abuja

The Nigerian National Petroleum Company Limited (NNPC) is seeking a fresh $2 billion to balance its finances and invest in new oil installations to raise crude oil production, Africa Intelligence has reported.

According to the report, the NNPC should announce in the next few days that it has finalised the new syndicated crude oil-backed loan.

Christened Project Leopard, the operation, it said, will enable the company to raise $2 billion in total, with the first $1 billion tranche already concluded and the NNPC Group Chief Executive Officer, Mele Kyari, and his staff, now putting the finishing touches to the second tranche for a similar amount.

The loan, the plans for which were first revealed by news agency Reuters in July, but without the value, the report said, should serve to restore the NNPC’s finances and enable it to invest in new oil installations with the aim of increasing its crude oil output, according to Kyari. 

“We have no problem covering our gasoline payments. This is just money for normal business and not a desperate act. It will be a syndication with critical but regular partners who have been in business with our company to forward the cash,” THISDAY recalls Kyari telling Reuters in July, adding that he expected to conclude the deal in the next two months from then.

Efforts to get a fresh response from the national oil company on the desk were not  fruitful last night. A text message to a spokesman of the NNPC was not immediately responded to.

But at the time the information first became public, the Chief Corporate Communications Officer, NNPC, Olufemi Soneye, said that the national oil firm would only make an official announcement anytime the company was ready to proceed with the deal.

He noted that though the company would require funding to carry out its capital-intensive operations, it would follow due process in announcing any financing arrangement.

“When we are ready to proceed with any of the initiatives mentioned, we will make an official announcement. As a global energy company, we need funding to undertake aggressive drilling campaigns. Naturally, we will require financing for our high capital expenditure projects.

“Our financing arrangements are typically announced through our financial advisers and arrangers. When the time comes, new financing transactions will be announced to the market,” Soneye stated in July.

Nigeria, where oil sales are one of the country’s main sources of income, has been looking for months to boost its revenues and foreign currency reserves. In July, the federal government set itself the target of increasing oil production to 2 million barrels per day (bpd) by the end of the year. In November, production stood at 1.7 million bpd.

But according to the information, Nigeria’s Oando group, which is headed by Adewale Tinubu, and the Abu Dhabi National Oil Company (ADNOC), are among the parties financing the loan. 

However, the report noted that Oando and ADNOC declined to comment when contacted. As for the NNPC, it told Africa Intelligence that “at this stage, it is premature to discuss or disclose details regarding any deal that has not been finalised”.

A few months ago, Oando loaned the NNPC $500 million as part of another syndicated loan operation called Project Gazelle. Swiss group Gunvor International and Nigeria’s Sahara Energy Resources also took part in the $3.175 billion operation, which was arranged by Afreximbank. 

It said that when it asked Afreximbank if it was involved in the new loan operation, the pan-African bank, headed by Nigerian national, Prof Benedict  Oramah, declined to respond.

ADNOC considered participating in Project Gazelle, but finally demurred, the report said. 

The 11.58 per cent interest rate on the loan was also considered to have been particularly high, prompting former Vice President Atiku Abubakar to describe the operation as “shady”. 

By way of comparison, on December 2, 2024, in its first Eurobond issue for two years, Nigeria raised $1.5 billion, repayable over 10 years at an interest rate of 10.375 per cent.

The NNPC should obtain a more favourable interest rate this time, it said. According to an estimate made by Kyari in July, the loan will be backed by the sale of 30,000-35,000 barrels of crude oil daily.