[Nigeria] NNPC acquires $1 billion crude oil fund
The Nigerian National Petroleum Corporation (NNPC) has acquired an estimated $1 billion worth of crude oil funding which will be used as a prepayment fund for the upstream operations of the Nigerian Petroleum Development Company (NPDC).
NPDC, a subsidiary of NNPC, will utilize the prepayment to pay approximately $700 million worth of tax obligations to the federal government. The balance will thereafter be used to fund NPDC’s capital and operating expenditures.
The crude oil purchaser, Eagle Export Funding Limited, will fund an upfront payment to the NNPC under a Forward Sale Agreement by raising capital in both domestic and international markets.
The NNPC stated that this financing is structured over two tranches and will be repaid by Eagle Export Funding Limited from the export earnings of the NPDC crude. Supported by Letters of Credit issued by banks with a minimum credit rating, and in accordance with market precedent, the two tranches will constitute a five-year USD amortizing tranche (tranche 1), and a seven-year NGN amortizing tranche (tranche 2). Both will benefit from a cash-sweep with Tranche 2 bearing a one-year non-call period.
The Eagle Export Funding Limited agreement involves Standard Chartered Bank, United Bank for Africa, Afrexim Bank, Union Bank, and two oil trading companies, which executed the standard NNPC Crude Oil Sale and Purchase Agreement, Vitol and Matrix Energy.