NEC approves $4.5bn refinancing of $3.3bn oil-backed loan

Nigeria's National Economic Council (NEC) has approved a significant financial maneuver, greenlighting the refinancing of the $3.3 billion Project Gazelle Pre-Export Finance Facility. The new arrangement, dubbed Project Gazelle 2, will see a $4.5 billion facility replace the existing one, aiming to optimize costs and unlock substantial liquidity for the nation.

The approval, granted at the 159th NEC meeting chaired by Vice President Kashim Shettima, follows a presentation by the Minister of Finance and Coordinating Minister of the Economy, Dr. Taiwo Oyedele. The Nigerian National Petroleum Company Limited (NNPC) can now refinance approximately $1.5 billion of the outstanding balance from the original 2023 facility. Crucially, this also unlocks an additional $3 billion in liquidity, intended to bolster Nigeria's external reserves and support ongoing fiscal and infrastructure initiatives.

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The refinancing has been structured on more favourable terms than the original facility, including a reduction in the volume of pledged crude oil from 90,000 barrels of oil per day to approximately 78,750 barrels of oil per day, a 12.5 per cent reduction.

Dr. Oyedele highlighted that the refinancing is structured on considerably more favorable terms than the original loan. A key improvement is the reduction in the volume of crude oil pledged as collateral. The daily crude oil pledge has decreased from 90,000 barrels per day to approximately 78,750 barrels per day, a reduction of 12.5%. This decrease means more crude oil is available for the federation to sell on the open market, generating revenue outside the loan facility's terms.

This dual achievement not only improves access to liquidity on better terms but also strengthens Nigeria's overall financing structure. The arrangement frees up resources for strategic national priorities while enhancing the country's financial framework. Vice President Shettima, in his opening remarks, urged the council to design a responsive, scalable, and data-driven social protection policy to combat multidimensional poverty in Nigeria.

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While accessing additional liquidity on improved terms, the arrangement is freeing up resources for strategic national priorities while strengthening the country’s financing structures.