Atiku Raises Concerns Over Nigeria's $12 Billion Repayment for $3.3 Billion NNPCL Emergency Loan

Former Vice President of Nigeria, Atiku Abubakar, expressed reservations on Thursday regarding the repayment strategy for the $3.3 billion emergency loan procured by the Nigerian National Petroleum Company Limited (NNPCL) to stabilize the naira.

In a statement posted on his official account, Atiku called on the federal government to provide clarity on the intricacies of the transaction, highlighting that the interest rate attached to the loan could translate into a substantial $12 billion repayment obligation for Nigeria in the foreseeable future.

While the government asserts that the loan's interest rate stands at 12%, Atiku contends that the crude-for-cash arrangement could lead to a repayment structure of $7 billion by the federal government.

Atiku's Concerns

Recall that on August 16, 2023, the Nigerian National Petroleum Company Limited secured a $3.3 billion emergency crude repayment loan from Afreximbank to stabilize the foreign exchange market.

Responding to this development, the former vice president raised concerns about the opacity of the loan details and characterized the repayment structure as 'shady.'

He stated, "The curious thing about this transaction is that, up till now, the Federal Government continues to keep mum about it, and the only information available to the public on the mega-deal is coming only through unofficial sources from the NNPC."

Explaining the intricacies, Atiku noted, "Nigeria's current Barrels Produced Daily (BPD) is 1.38 million, and according to the Project Gazelle deal, Nigeria is to supply 90,000 Barrels of its daily production, starting from 2024 till it is up to 164.25 million barrels for the repayment of the loan."

Continuing, he highlighted the financial implications, "Now, this is where the details get disturbing because Nigeria’s benchmark for the sale of crude per barrel in 2024 is $77.96. A simple multiplication of that figure by 164.25 will give us a whooping $12 billion."

Atiku concluded, "It is inconceivable that the Federal Government will lead the country to take a loan of $3.3 billion with an interest rate that is not more than 12%, but with estimated repayment amounting to $12 billion. That is a humongous differential of about $7 billion between what is in the details of the deal on paper and what indeed is the reality."

Key Points

- In August 2023, NNPC sought a $3.3 billion emergency crude repayment loan from Afreximbank to stabilize the foreign exchange market.

- Nigeria will pay an interest of 11.85% per annum on the $3.3 billion "pre-export finance facility" arranged by Afreximbank.

- Afreximbank confirmed an initial disbursement of $2.25 billion under the crude oil prepayment facility, with a second tranche of $1.05 billion expected to be disbursed subsequently.