Forex crisis : Dollar to crash further as NNPCL secures $3bn AFREXIM facility

The Nigerian National Petroleum Company Limited has secured a $3bn emergency loan from the African Export-Import Bank to ease pressure on the naira.

At an event held in Cairo, Egypt, both parties jointly signed a commitment letter and Termsheet for the emergency loan of $3bn.

This transaction will provide some immediate disbursement that will help NNPCL support the Federal Government in its ongoing fiscal and monetary policy reforms aimed at stabilizing the exchange rate market.

The move is expected to boost foreign exchange liquidity into the country and will further drive down the exchange rate between the naira and the dollar.

This is the fourth transaction being consummated between NNPCL and AFREXIM Bank over the last 3 years and goes to further consolidate the mutual relationship between the two entities.

Both Nigeria and NNPCL are shareholders in AFREXIM Bank, with sole purpose of enhancing investments and growing prosperity in Africa

The agreement for the loan which was sealed on Wednesday in Cairo, saw the Group Chief Executive Officer of NNPC Ltd, Mallam signing for the National Oil Company while Dr George Elimbi, Executive Vice President Afreximbank signed for the bank.

The deal is coming about 17 months after the NNPCL secured a $5bn funding commitment from the African Export-Import Bank (Afreximbank) to finance major investments in Nigeria’s upstream sector.

The $5bn deal was an offshoot of the meeting between Benedict Oramah, chairman of the board of directors and president of the African Export-Import Bank (Afreximbank) and the NNPC team led by Kyari, in Cairo, Egypt

In November 2021, AFREXIM Bank had signed a $1.04bn deal with the NNPC limited at the Intra-African Trade Fair (IATF) in Durban, South Africa.

Then, the NNPC said this move marks a major achievement in its quest to scale up investments in the oil and gas industry following the commencement of the implementation of the Petroleum Industry Act.

The Petroleum Industry Bill was signed into law on August 16th, 2021, by former President Muhammadu Buhari.

Following the assent, NNPC was incorporated by the Corporate Affairs Commission (CAC) after an application for its registration from the federal government.

The new legislation provides room for business opportunities that would enable the NNPC to earn more revenue and attract foreign direct investment into the Nigerian energy sector.