By Adedapo Adesanya
The African Export-Import Bank (Afreximbank) is planning to use oil traders to fund a $3 billion loan to the Nigerian National Petroleum Company (NNPC) Limited, which is aimed at stabilising the weakening Naira.
According to a Reuters report, the Cairo-based bank has made contact with traders to gauge their interest in lending their support to the oil-backed loan to Nigeria’s national oil company.
The sources who spoke to the publication also disclosed that Afreximbank has made an attempt to come up with the terms that they will present to trading houses.
“There is a lot of interest, but they need to see the conditions,” a senior oil executive with knowledge of the negotiations told Reuters’ sources.
The executive added that increasing oil prices above $90 a barrel would help increase interest, but he asked that his name not be used because he is not permitted to speak publicly on the matter.
Business Post had reported that the local currency appreciated to N755 per Dollar at the official foreign exchange (FX) market while at the unregulated market like the Peer-2-Peer (P2P) market, the Naira sold for N1,020/$1.
Nigeria’s huge FX backlog is limiting the availability of Dollars on the official market, forcing businesses and individuals to seek them on the black market.
Recall that in August, NNPC said that it had secured an emergency $3 billion crude oil repayment loan, which is aimed at stabilising the Naira.
NNPC Limited, in a statement, said it secured the crude-for-cash funding from Afreximbank headquarters in Cairo, Egypt.
The oil-for-cash loan is meant to be used to support the Naira as it continues its free fall and stabilises the FX market.
This is the fourth transaction being consummated between NNPC and Afreximbank over the last 3 years to further consolidate the mutual relationship between the two entities. Nigeria and NNPC Limited are shareholders in Afreximbank, with the sole purpose of enhancing investments and growing prosperity in Africa.
