Forex Crisis: NNPCL $3 Billion Emergency Loan Not Crude-For-Refined Products Swap – Presidency Clarifies

Two of President Bola Tinubu’s media aides, Ajuri Ngelale and O’tega Ogra, have clarified the $ 3 billion emergency crude repayment loan secured by the Nigerian National Petroleum Company Limited (NNPCL) on Wednesday.

Naija News reported on Wednesday that following the current forex crisis in the oil and gas industry, the Nigerian National Petroleum Company (NNPC) Limited secured an emergency $3 billion crude oil repayment loan to stabilise the country’s exchange rates.

The NNPCL took to Twitter to announce that it secured $3 billion from AFREXIM Bank, the trade finance bank for Africa.

NNPCL wrote, “Relief For The Naira: NNPC Ltd Secures $3billion Emergency Crude Repayment Loan from AFREXIM Bank.

“The NNPC Ltd. and @afreximbank have jointly signed a commitment letter and Termsheet for an emergency $ 3 billion crude oil repayment loan.

“The signing, which took place today at the bank’s headquarters in Cairo, Egypt, will provide some immediate disbursement that will enable the NNPC Ltd. to support the Federal Government in its ongoing fiscal and monetary policy reforms aimed at stabilizing the exchange rate market.”

However, in less than 24 hours, speculation has emerged questioning why the oil company, which is commercialized, would secure such a massive loan on behalf of the government.

But providing more insight into the NNPCL loan, official Spokesperson and Special Adviser to the President on Media, Ajuri Ngelale, took to micro-blogging platform Twitter, to clarify that the oil company took the loan to pay taxes and royalties in advance and provide the FG with dollar liquidity to stabilize Naira via incremental releases based on government’s needs.

He said, “This is a major buffer against the need to re-engage in the subsidy regime.”

Throwing more light on the matter, Senior Special Assistant to the President on Digital/New Media, O’tega Ogra, clarified that the loan is not a crude-for-refined products swap but an upfront cash loan against proceeds from a limited amount of future crude oil production.

Ogra, according to Nigerian Tribune, pointed out that the money would be released in stages or tranches based on the specific needs and requirements of the Federal Government.

He submitted that “This is not a crude for refined products agreement where the government does not earn any proceeds from the swap.

“The loan will be repaid against a fraction of proceeds from future crude oil production. It’s a strategic move that ensures a balance between our current economic needs and future production capabilities.”

Ogra added that while the deregulation policy remains, “a strengthened Naira as a result of this initiative will lead to a reduction in fuel costs. This means that if the Naira appreciates in value, the cost of fuel will drop, and further increases will be halted.”