Nigerian National Petroleum Corporation Secures $3 Billion Loan to Boost Naira

In a development that seems to offer a potential uplift for the Nigerian currency, the Nigerian National Petroleum Company (NNPC) Limited and the African Export-Import Bank (Afreximbank) have collaboratively executed a commitment letter and Termsheet for a critical $3 billion loan aimed at repaying crude oil obligations.

The signing ceremony occurred today at Afreximbank’s headquarters in Cairo, Egypt. This agreement will facilitate prompt disbursement, providing the necessary resources for NNPC Ltd. to assist the Federal Government in its ongoing endeavors to implement fiscal and monetary policy reforms, ultimately working towards stabilizing the exchange rate market.

This disclosure is contained in a statement issued by NNPC on Wednesday, August 16, 2023, and can be seen on its official Twitter account.

This might not be unconnected to an earlier pronouncement by the acting Governor of the Central Bank of Nigeria (CBN), Folashodun Shonubi, a few days ago, that the apex bank had secured the President’s directive to improve liquidity in the foreign exchange market and stabilize the naira

Supports ongoing fiscal, monetary reforms

The NNPC in a terse statement said,

• “The NNPC Ltd. and AFREXIM bank have jointly signed a commitment letter and Termsheet for an emergency $3 billion crude oil repayment loan.
• “The signing, which took place today at the bank’s headquarters in Cairo, Egypt, will provide some immediate disbursement that will enable the NNPC Ltd. to support the Federal Government in its ongoing fiscal and monetary policy reforms aimed at stabilising the exchange rate market.’’

The loan with the expected dollar inflow will add liquidity to the foreign exchange market and bring some respite to the naira which had depreciated significantly against the dollar over the past week.