FG may secure a $1 billion loan from Afreximbank in May.

Nigeria is poised to secure a $1.05 billion syndicated loan backed by oil from the African Import Export Bank in the coming month.

This loan is part of a larger $3.3 billion prepayment facility organized by Afreximbank, with repayment terms linked to crude cargoes from the Nigerian National Petroleum Company Ltd.

Denys Denya, Afreximbank’s Senior Executive Vice President for Finance, Administration, and Banking, confirmed the verification of crude availability, paving the way for the final release of the balance within the next month, as reported by Bloomberg.

The primary goal of this loan is to rejuvenate Nigeria’s economy and bolster the supply of hard currency in the local foreign exchange market. The disbursement of two-thirds of the loan amount in January indicates progress towards achieving these objectives.

This financial strategy is crafted to provide immediate funds to Nigeria based on future oil production, offering vital support to the nation’s struggling economy.

In January, the Nigerian National Petroleum Company Limited announced plans to prepay future royalties and taxes to the Federal Government as part of the $3.3 billion financing deal obtained from the African Export-Import Bank last year. This initiative aims to stabilize Nigeria’s exchange rate and mitigate financial risks.

NNPCL disclosed that a conservative crude price benchmark of $65 per barrel was adopted for the $3.3 billion deal to minimize the risk of default and ensure financial stability.

The company reserved up to 90,000 barrels of crude for Project Gazelle, ensuring sufficient cash flow for repayment and other financial obligations.

Repayments are strategically scheduled and linked to future oil sales, with conservative pricing in oil sales contracts aimed at mitigating risks associated with oil price volatility.