How Nigeria Government Plans to Repay $1.5 Billion Loan, Deal Already Signed

Date: 29-07-2020 9:54 am (3 years ago) | Author: kacy lee
- at 29-07-2020 09:54 AM (3 years ago)
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The Nigerian National Petroleum Corporation (NNPC) on behalf of the Federal Government has signed a $1.5 billion oil prepayment deal with Standard Chartered and backed by oil traders, Matrix Energy and Vitol Group.

The pact which is Nigeria’s first deal of this nature since the COVID-19 pandemic, would see the country supply a certain quantity of prepaid barrels of oil over time.

According to Reuters, Matrix and Vitol individually would receive 15,000 barrels per day (bpd) of oil from Nigeria as repayment over a five-year period from August.

The financing arrangement called ‘Project Eagle’ was also supported by United Bank for Africa (UBA) and African Export Import Bank (Afrexim).

Nigerian trader, Matrix confirmed its participation in the deal, while Vitol, the world’s biggest independent oil trader declined to comment
A spokesman for Standard Chartered also declined to comment and Afrexim did not have an immediate comment.

UBA and the NNPC also did not immediately respond to Reuters’ requests for comment.

The prepayment deal will likely weaken longer-term revenues since Nigeria will offer its oil at a reduced price and will miss out on any price increases.

However, the deal would provide Nigeria with upfront cash and guaranteed revenue as it expands its budget.

At the same time, the agreement would assure traders a source of supply at a discount for an extended period of time that they can use for resale in the global market.

Prepayment deals are not common, but it usually allow traders to establish long-term relationships with producers.

Prepayments with traders are commonplace in commodity finance considering that banks see them to be one of the more reliable means of lending in countries perceived as risky.

Recall that Nigeria had signed a $4.5bn (£2.9bn) deal with US-based Vulcan Petroleum to build six oil refineriee that could boost refining capacity in the country by 180,000 barrels a day.


Posted: at 29-07-2020 09:54 AM (3 years ago) | Addicted Hero
- Baye77 at 29-07-2020 04:34 PM (3 years ago)
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We keep borrowing...yet people keep stealing billions on a regular basis
Posted: at 29-07-2020 04:34 PM (3 years ago) | Hero
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