(Bloomberg) – Nigeria said it approved a $4.5 billion arrangement with the state-owned energy firm that will liberate funds to bolster foreign-exchange reserves and spending on the government’s ongoing infrastructure priorities.
The country will receive the money from a refinanced pre-export crude facility that is secured by 78,750 bbls of daily oil output by the Nigerian National Petroleum Co., the office of Vice President Kashim Shettima said in a statement Tuesday. The National Economic Council approved the deal in a meeting on Monday, it said.
Africa’s largest crude producer has increased average output this year to 1.5 MMbpd and produced 1.56 MMbpd in June, the highest level since April 2020. The government has set a target of 3 MMbpd by 2030.
The arrangement will free up resources for strategic priorities and strengthen the country’s financing framework, Finance Minister Taiwo Oyedele told the NEC meeting while seeking approval for the facility.
The deal marks Nigeria’s second major external financing arrangement this year, following a $5 billion total return swap agreement with First Abu Dhabi Bank PJSC, the United Arab Emirates’ largest lender, in April. The government has already accessed $1.5 billion through the facility.
Of the new facility, $1.5 billion will refinance the outstanding balance of a 2023 NNPC loan, while the state-owned energy company will receive an additional $3 billion in fresh financing. The proceeds are typically used to settle tax and royalty obligations to the government upfront, as well as other outstanding liabilities.
Shettima’s office did not disclose the duration of the facility. A similar arrangement in 2023 had a five-year tenor and was secured against 90,000 bbls of crude per day. It was arranged by African Export-Import Bank, with Geneva-based commodities trader Gunvor International BV and Lagos-based Sahara Energy Resources Ltd. participating in the syndicated facility. United Bank for Africa Plc served as the local arranger and onshore account bank.
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