The $3 billion loan agreement for crude oil repayment between the Nigerian National Petroleum Corporation (NNPC) Limited and the African Export-Import (Afrexim) Bank has encountered a setback, with reports suggesting that other lenders, initially slated to participate in the syndicated transaction, have withdrawn their support, as informed sources have disclosed to MoneyCentral.Thank you for reading this post, don't forget to subscribe!
Sources familiar with the matter indicate that Afrexim Bank’s initial commitment of $250 million, intended to attract additional lenders due to their existing exposure to Nigeria and their obligor limits, hit a stumbling block when NNPC Managing Director Mele Kyari unexpectedly announced that the funds would be utilized to stabilize the naira. This unexpected announcement reportedly caused discomfort among other potential lenders.
Surprisingly, a search on Afrexim Bank’s official website yielded no mention of the loan deal. Meanwhile, the Central Bank of Nigeria (CBN) has witnessed no notable increase in its gross reserves, with a minor decline of 0.2% to $33.68 billion since the agreement’s announcement on August 16th.
Data from Afrexim Bank’s financials for the first quarter of 2023 reveal that the West African region already accounts for 45% of the loans extended by the bank.
Speculation suggests that the NNPC Managing Director’s eagerness to please Nigeria’s new President, Bola Tinubu, may have prompted the premature announcement of the deal. However, concerns over Nigeria’s financial stability, coupled with the significant issue of oil theft, have left financiers understandably cautious about participating in the agreement, as emphasized by one of the sources.