NNPC secures $5bn funding from Afreximbank for Nigeria’s oil industry

The African Export Import Bank has committed $5 billion in corporate finance to the Nigerian National Petroluem Company Ltd to fund major investments in the country’s upstream sector.

The funding commitment stems from a meeting on Wednesday in Cairo, Egypt, between Benedict Oramah, Chairman of the Board of Directors and President of the African Export-Import Bank (Afreximbank), and the NNPC Ltd team, led by Group Managing Director/Chief Executive Officer Mele Kyari.

Mr Kyari was accompanied on the trip by Umar Ajiya, Chief Financial Officer; Adokiye Tombomieye, Group Executive Director, Upstream; Bala Wunti, Group General Manager, NAPIMS; Lawal Sade, Managing Director, NNPC Trading, and others.

The move marks a significant step forward in the corporation’s efforts to increase investments in the oil and gas industry following the start of the Petroleum Industry Act’s implementation.

President Muhammadu Buhari signed the PIA into law on August 16, 2021.

After receiving an application for registration from the Federal Government, the NNPC LTD was incorporated by the Corporate Affairs Commission on September 22 last year with the President’s approval.

The new legislation has opened up new business opportunities for the NNPC, allowing it to generate more revenue for the country and attracting foreign direct investment into Nigeria’s energy sector.

The PIA has also raised stakeholder expectations of the company while also providing it with a lot of leeway to stimulate oil and gas investment.

Oil industry stakeholders see the NNPC’s $5 billion corporate finance commitment from Afreximbank as a dividend of the Petroleum Industry Act and the NNPC’s incorporation as a limited liability company.

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The Company would raise between $3.5 billion and $5 billion in corporate finance to fund major upstream investments under NNPC Ltd’s funding strategy for selected upstream investments.

To achieve this goal, the NNPC intends to purchase pre-emption rights in the sample Joint Venture and take over ownership from the non-investing partner.

The NNPC’s strategy also includes investing in assets to address integrity, bottlenecking, and growth issues in the oil industry, such as rig-less activities and drilling campaigns.

The company prefers to find lenders who can provide this funding in a ratio that is based on each lender’s capacity.

The funds will also be used to fund a portion of the NNPC’s investment, which will include the purchase of a stake in high-quality upstream oil and gas producing assets.