The United Bank for Africa (UBA) has participated in a consortium to lend $1.5 billion to Nigerian National Petroleum Corp. (NNPC) and its upstream Nigerian Petroleum Development Co. (NPDC) unit.
UBA will provide $200 million of the amount, in naira.
The total $1.5bn will be provided in two tranches. The first $1bn potion will be repaid over five years and is provided in dollars. The second $500mn potion will be in naira and repayable over seven years. UBA is participating in the second and acting as facility agent bank.
NPDC will repay the pre-export finance facility in oil, with a commitment of 30,000 barrels per day.
The agreement also involved Standard Chartered, Afeximbank, Union Bank and two oil traders, Vitol and Nigeria’s Matrix Energy. An Afreximbank representative declined to comment, while Standard Chartered and Vitol have not yet responded to requests for information.
UBA’s chairman Tony Elumelu noted the current challenges Nigeria was acing. “With the sharp drop in the price of oil and the ensuing hardship that followed the onset of the Covid-19 pandemic, the private sector must come together and contribute meaningfully to the economy.
“This facility is clear evidence of this – UBA is providing investment that will significantly improve Nigeria’s production capacity and in doing so also demonstrating the strength, depth, and sophistication of our commercial banking capability.”
UBA has played a part in other energy financing agreements, including a 2013 and 2015 deals with NNPC.
NNPC has termed the $1.5bn financing deal Project Eagle, according to Reuters. The company listed this among NNPC’s head Mele Kyari’s achievements in early July.
At that point, Afreximbank was linked to plans for funding rehabilitation work on the Port Harcourt refinery. As of April, NNPC reported this refinery was operating at 1.2% of its capacity utilisation.