To support Nigeria’s effort to rebuild the country’s petroleum industry following the devastating impact of COVID-19 on the global economy, the United Bank for Africa Plc (UBA) on Tuesday announced a $1.5 billion financing package for the Nigerian National Petroleum Corporation (NNPC) and its upstream subsidiary, the Nigerian Petroleum Development Company (NPDC).
Out of the financing package, the bank said as the Initial Mandated Lead Arranger, it would provide the Naira equivalent of $200 million to support investment growth and liquidity requirements of the national oil company, while a consortium of Nigerian commercial and international banks would arrange the balance of $1.3 billion as part of a pre-export finance facility for the corporation.
The bank described the $1.5 billion facility as timely financing for post-COVID 19 economic growth of Nigeria’s petroleum industry, to help boost the Nigerian oil production capacity and government revenue.
“The $200 million facility will provide the much-needed capital for investment in NNPC’s production capacity, which is of strategic importance to the Nigerian economy and the country’s leading source of foreign exchange earnings,” the bank said.
“UBA’s position as the Mandated Lead Arranger recognizes the Group’s strength in structuring and deploying financing to the oil and gas sector, and the depth and liquidity of the Group’s balance sheet,” it added.
Details of the $1.5 billion facility showed that it was structured in two tranches, consisting $1 billion in the first tranche, to be provided in dollars, and to be repaid over a period of five years, with UBA as the Facility Agent Bank.
The second tranche of $500 million, the bank said, would be provided in local currency, over seven years, with UBA acting as Lead Bank, providing $200 million in Naira equivalent.
The bank said both facilities would be repaid from an allocation of 30,000 barrels per day of NPDC’s crude oil production.
Other members of the consortium financing the NNPC deal include Standard Chartered Bank, AFREXIM Bank, Union Bank and two oil trading companies, Vitol and Matrix.
The Group Chairman of UBA, Tony Elumelu, said this was the most recent support by the bank for Nigeria’s petroleum industry, which is facing one of the most economically challenging years witnessed in recent times.
With the sharp drop in the price of crude oil at the international oil market and the ensuing hardship that followed the outbreak of the Covid-19 pandemic, Mr Elumelu urged the private sector to come together and contribute meaningfully to the economy.
“This facility is a clear evidence of this support by UBA, which is providing an investment that will significantly improve Nigeria’s production capacity and in doing so also demonstrating the strength, depth, and sophistication of our commercial banking capability.
“I believe that together, working with governments, we can create more jobs and more wealth for people, not only in Nigeria but across Africa,’’ he said