TheCable

Afreximbank is approaching oil traders to finance a $3 billion loan to the Nigerian National Petroleum Company (NNPC) Limited, which is central to the country’s efforts to support the naira.

On August 16, 2023, the NNPC secured a $3 billion emergency crude repayment loan to support the naira and stabilise the foreign exchange (FX) market.

According to a Reuters report on Wednesday, sources said Afreximbank approached traders in recent weeks seeking their interest in funding the oil-backed loan to NNPC. 

According to the sources, Afreximbank is working to craft terms to offer to the trading houses.

“There is a lot of interest, but they need to see terms,” an oil industry stakeholder told Reuters.

The source, who could not be named because he was not authorised to speak publicly on the issue, added that oil prices climbing past $90 per barrel would help drive interest.

One of the sources told Reuters that traders who put up cash would be repaid in physical cargoes of oil. 

“The bank is working to determine how much oil to offer those traders in exchange for the financing,” Reuters said. 

On May 29, 2023, President Bola Tinubu announced that the petrol subsidy regime was over, tripling petrol prices across the country. 

Thereafter, on June 14, the Central Bank of Nigeria (CBN) announced the unification of all segments of the forex exchange (FX) market.

After an initial convergence in the month, the gap between the official and parallel markets began to widen — hitting N219 on Monday.

On Tuesday, the naira hit an all-time low of 1,000 to the dollar on the black market.