The Nigerian National Petroleum Corporation (NNPC) has gotten a prepayment subsidizing of around US$1b to help the upstream tasks of its auxiliary, Nigerian Petroleum Development Company (NPDC).
This is contained in an announcement marked by Kennie Obateru, NNPC’s Group General Manager
Group Public Affair Division.
The crude oil prepayment has, according to the statement,, empowered NNPC to pay NPDC’s Tax commitments to the Federal Government of Nigeria, of around US$700M with the parity used to finance NPDC’s capital and working consumptions.
The prepayment financing is supported by future oil creation of NPDC, and uses an entrenched structure to empower the buyer of the unrefined, Eagle Export Funding Limited, to bring financing up in the household and universal business sectors, to finance an upfront payment to NNPC under a Forward Sale Agreement (FSA).
The statement has it further: “The financing which funded the prepayment has been structured over two tranches: a 5 year USD amortizing tranche (“Tranche 1”) and a 7 year NGN amortizing tranche (“Tranche 2”). Both tranches benefit from a cash sweep with the 7-year tranche having a 1-year non-call period.
These tranches shall be repaid by Eagle Export Funding Limited from the export sale proceeds of the NPDC crude, which in turn are backed by Letters of Credit, issued by banks with a minimum credit rating, in line with market precedent.
The export price for the crude is the relevant NNPC Official Selling Price (OSP) for the corresponding calendar month and crude grade. Vitol and Matrix Energy have executed the standard NNPC Crude Oil Sale & Purchase Agreement.
The participants in the Eagle Export Funding Limited deal include Standard Chartered Bank, United Bank for Africa, Afrexim Bank, Union Bank and two oil trading companies, Vitol and Matrix Energy.
Despite the constrained liquidity situation in the financing markets due to the COVID-19 pandemic; the pricing and terms obtained for the USD and NGN funding tranches were very competitive and better than precedent transactions.”
