NEC approves $4.5bn refinancing deal for NNPC’s oil-backed loan

The National Economic Council (NEC) has approved a $4.5 billion refinancing package for the Nigerian National Petroleum Company (NNPC) Limited, replacing the existing $3.3 billion Project Gazelle pre-export finance facility secured in 2023.

The new financing arrangement, known as Project Gazelle 2, will enable the NNPC to refinance the outstanding $1.5 billion balance on the original loan while providing an additional $3 billion in fresh liquidity. The funds are expected to bolster Nigeria’s external reserves and support the federal government’s fiscal and infrastructure programmes.

In a statement issued after the council’s meeting, NEC said the initiative would unlock additional liquidity for the federation and expressed its support for the implementation of the refinancing plan.

Chairman of the Presidential Fiscal Policy and Tax Reforms Committee, Taiwo Oyedele, said the new facility offers more favourable terms than the previous arrangement.

According to him, the volume of crude oil committed under the agreement has been reduced from 90,000 barrels per day to about 78,750 barrels per day, representing a 12.5 per cent decrease.

He explained that the revised structure would free up an additional 11,250 barrels per day for the federation while reducing the amount of crude pledged by the NNPC.

Oyedele said the refinancing not only provides access to more funding on improved terms but also creates additional fiscal space for the government to pursue strategic national priorities while strengthening Nigeria’s financing framework.

Speaking at the meeting, Vice-President Kashim Shettima stressed the need for a responsive, scalable and data-driven social protection system to address multidimensional poverty across the country.

He said government policies should produce tangible improvements in the lives of citizens, including lower food prices, better healthcare, improved education, enhanced family welfare, stronger investor confidence and greater support for state governments.

Shettima urged members of the council to ensure their decisions reassure Nigerians that the government remains attentive to the country’s challenges and is committed to responding with competence, compassion and purpose.

The original Project Gazelle facility was secured by the NNPC on August 16, 2023, as a $3.3 billion emergency crude-backed loan designed to support the naira and stabilise Nigeria’s foreign exchange market.

The financing, arranged by the African Export-Import Bank (Afreximbank), was also intended to support the federal government’s monetary and fiscal reform agenda.

Under the original agreement, Nigeria was to pay an annual interest rate of 11.85 per cent. The loan was structured through Project Gazelle Funding Ltd (PGFL), a special purpose vehicle incorporated in the Bahamas, with the NNPC serving as sponsor and repaying the facility through crude oil deliveries to the SPV.

As part of the arrangement, the NNPC was also required to prepay future royalties and taxes due to the federal government.