8 FACTS ON THE $3 BILLION NNPCL-AFREXIM LOAN

Tunji Wusu –

1. What is the purpose of the $3 billion loan?

The $3 billion loan from AFREXIM Bank for the repayment of crude oil is not a swap of crude for refined products but rather an upfront cash loan secured by a small portion of future crude oil production earnings.

2. Is the Nigerian Treasury or NNPC Ltd. taking a risk with this loan?
Only a small portion of NNPC Ltd.’s rights are subject to exposure or risk. Additionally, this loan is not backed by any sovereign assurances.

3. What is the advantage of this loan to Nigeria?
The financing will help NNPC Ltd. pay taxes and royalties in advance. It will also provide the Federal Government with the required dollar liquidity to safely stabilize the Naira.

4. How will the loan be paid back?
The funding will be released in stages or tranches based on the Federal Government’s specific needs and requirements.

5. How would this effect gasoline prices?
Fuel expenses will be reduced as a result of the strengthened Naira as a result of this approach. This means that if the Naira strengthens, fuel prices will fall and further hikes will be prevented.

6. What about financial aid? Are they returning?
Subsidies won’t be required because prices will fall from their current level as a result of a stronger naira. The deregulation strategy has not changed.

7. Describe the loan’s repayment plan.

A portion of future crude oil production earnings will be used to pay back the loan. It’s a calculated strategic move that strikes a balance between our immediate economic requirements and our capacity for growth.

8. What distinguishes this swap agreement from earlier ones?

This is not a swap where crude is exchanged for refined goods and no money changes hands.

Will the loan have an impact on fuel prices?

Fuel prices will drop if the naira is stronger. The naira will appreciate more and petrol prices will decrease if the loan is used to defend the currency.

NNPCLimited and O’tega Ogra, Senior Special Assistant to the President, Bola Tinubu, on Digital/New Media, gave this breakdown.