NNPC Obtains $1bn Prepayment Funding For NPDC’s Upstream Operations
The Nigerian National Petroleum Corporation (NNPC) has obtained a prepayment funding of $1bn to support the upstream operations of its subsidiary, Nigerian Petroleum Development Company.
The corporation said this in a statement signed by Kennie Obateru, Group General Manager, Public Affair Division on Thursday.
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The statement noted that crude oil prepayment has enabled the Corporation to pay NPDC’s $700m Tax obligations to the Federal Government with the balance utilised to fund NPDC’s capital and operating expenditures.
It said, “The prepayment financing is backed by future oil production of NPDC, it utilises a well-established structure to enable the purchaser of the crude, Eagle Export Funding Limited to raise financing in the domestic and international markets, to fund an upfront payment to NNPC under a Forward Sale Agreement.
“The financing which funded the prepayment has been structured over two tranches. A five year United States Dollar amortizing tranche (“Tranche 1”) and a 7 year Naira amortizing tranche (“Tranche 2”). Both tranches benefit from a cash sweep with the 7-year tranche having a 1-year non-call period”.
The Corporation said these tranches would be repaid by Eagle Export Funding Limited from the export sale proceeds of the NPDC crude, which in turn are backed by Letters of Credit, issued by banks with a minimum credit rating, in line with market precedent.
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It said that the export price for the crude is the relevant NNPC Official Selling Price for the corresponding calendar month and crude grade.
“Vitol and Matrix Energy have executed the standard NNPC Crude Oil Sale & Purchase Agreement.
“The participants in the Eagle Export Funding Limited deal include Standard Chartered Bank, United Bank for Africa, Afrexim Bank, Union Bank and two oil trading companies, Vitol and Matrix Energy,” the statement added.
The Corporation also noted that despite the constrained liquidity situation in the financing markets due to the COVID-19 pandemic, the pricing and terms obtained for the Dollar and Naira funding tranches were very competitive and better than precedent transactions.
