The Nigerian National Petroleum Company Limited, NNPCL, has asked the Senate to refer all questions concerning the $3.3bn cash-for-crude laon to the Central Bank of Nigeria.
According to the Chief Financial Officer of the company, Mr. Umar Isa Ajiya, the NNPCL only stepped in to assist the CBN in securing the loan, it however, has no involvement in its utilization.
Addressing members of the Senate Committee on Finance on Wednesday at the National Assembly, Mr. Ajiya said, “the utilization of that $3bn is really the prerogative of CBN. And therefore, for us as NNPCL, we simply stepped in support.”
On August 16, 2023, the NNPCL secured a $3.3 billion emergency crude repayment loan. The loan, which was facilitated by the African Export-Import Bank the company say was aimed at supporting the naira, stabilising the foreign exchange market and supporting the federal government fiscal policy reforms.
In late December of 2023, Nigeria received the withdrew the first portion of the facility amounting to $2.2bn. The receipt of this sum has generated criticisms from key stakeholders including, Atiku Abubakar, the presidential candidate of the People’s Democratic Party (PDP).
Atiku in a statement release late January said a Special Purpose Vehicle called Project Gazelle Funding Limited is driving the deal, and it was incorporated in the Bahamas.
He said, “SPV is the borrower while the NNPCL is the sponsor, with an agreement to pay with crude oil to the SPV in order to liquidate the loan at an interest.
The Chairman Senate Committee on Finance, Senator Sani Musa at a meeting with the NNPCL and Federal Inland Revenue Service (FIRS) queried the NNPCL saying, “This funds (the loan) is supposed to cushion and subtle the volatility we have in foreign exchange. What are we doing about this? We want to know why it was taken? What has been done with it? Nigerians are not feeling it. We thought when $3.3bn comes, Naira will appreciate.
His questions may however, not be unconnected with the concerns raised by Atiku and other Nigerians.
Responding, Mr. Ajiya said, he thanked the “Mr. Chairman for calling for this clarification because it is very important to dispel rumours and fake news out there in the public.”
Giving details on cash- for-loan facility, he said, “What is this $3.3bn facility? It is an NNPCL initiative. NNPCL is a limited liability company.
“This is pre-export financing. It is basically a forward sell of crude oil over the next five, for which we received money upfront.
Adding that “We received that money upfront because we pledged. The barrel we pledged are plc barrels and plc barrels belong to the federation. And because of that we have to seek the consent of the owners of the plc, tax and royalties barrels, which is NUPRT and FIRS. And in order to give it necessary backing for them to consent and for us to pledge those barrels, we got National Economic Council’s (NEC) approval.
“Now it is NNPCL that is borrowing and what simply we are doing is that we have giving this monies to Central Bank upfront as prepayment of royalties and taxes. The accounting for that may be the CBN, FIRS and UPRC is also to be handled separately by a joint management team. Now, the main purpose was to get this funds to give CBN to support CBN and manage the forex volatility as you rightly said.
“On the 28 of December, 2023, we drew down the first portion of that facility $2.2bn and that was credited to the CBN’s accounts with… Bank.
“The balance of $1.05bn is suppose to be credited before the end of this month (February) into the same account. So, the utilization of that $3bn is really the prerogative of CBN. And therefore, for us as NNPCL, we simply stepped in support.”
