The Nigerian National Petroleum Corporation (NNPC) has reportedly received funding to the tune of $1 billion for upstream operations for its subsidiary, Nigerian Petroleum Development Company (NPDC).
The funds, NNPC sources confirmed, has enabled NNPC to pay its subsidiary, Nigerian Petroleum Development Company (NPDC), tax obligations to the federal government of about $700 million with the balance to be used for NPDC’s capital and operating expenditures.
NNPC spokesman, Dr. Kennie Obateru, who spoke on the development, explained that the repayment financing is backed by future oil production of NPDC. The financing, which funded the prepayment has been structured over two tranches, he said.
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He explained further that there is a five-year US Dollar amortizing tranche and a seven-year NGN amortizing tranche. Both tranches will benefit from a cash sweep with the seven-year tranche having a one-year non-call period.
The NNPC 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.
“These tranches shall 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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“The export price for the crude is the relevant NNPC Official Selling Price (OSP) for the corresponding calendar month and crude grade. Vitol and Matrix Energy have executed the standard NNPC Crude Oil Sale & Purchase Agreement,” the Corporation’s stated.
By Chibisi Ohakah, Abuja
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