In what seems to be a significant economic move under the leadership of Bola Tinubu, the Federal Government, on August 16, 2023, reportedly secured a $3.3 billion emergency crude repayment loan through the Nigeria National Petroleum Company (NNPC). According to NNPC, this loan was intended to bolster the Naira and stabilize the Foreign Exchange market.
However, what raises questions about this transaction is the lack of official communication from the Federal Government regarding the matter. As of now, the government has remained silent on the issue, and the only information available to the public regarding this substantial deal comes solely from unofficial sources within the NNPC.
The arrangement is purportedly a crude-for-cash loan facilitated by the African Export-Import Bank. It involves a Special Purpose Vehicle (SPV) named Project Gazelle Funding Limited, which was incorporated in the Bahamas.
Under this deal, the SPV acts as the borrower while the NNPC serves as the sponsor. The agreement entails repaying the loan by delivering crude oil to the SPV, with an interest rate slightly exceeding 12 percent.
What adds to the complexity of this arrangement is the registration of a company in the Bahamas by the Federal Government, especially considering the recent scandal involving the Paradise Papers associated with that country.
Furthermore, Nigeria’s current daily production capacity stands at 1.38 million Barrels Produced Daily (BPD). As per the terms of the Project Gazelle deal, Nigeria is obligated to supply 90,000 barrels of its daily production, commencing from 2024 until it reaches a total of 164.25 million barrels for loan repayment purposes.
The discrepancy in the projected repayment amount is indeed alarming. Based on Nigeria’s crude sales benchmark of $77.96 per barrel in 2024, a simple calculation indicates a staggering $12 billion repayment obligation when multiplied by the agreed quantity of 164.25 million barrels.
This stark contrast between the estimated repayment figure and the actual loan amount of $3.3 billion, coupled with the interest rate not exceeding 12 percent, raises serious concerns about the transparency and integrity of this deal.
It is imperative for the Federal Government to address these opaque details surrounding the transaction. The public deserves clarity and transparency regarding such significant financial agreements. We urge the government to provide comprehensive explanations to resolve these lingering questions and ensure accountability in this matter.
As representatives of the ordinary people of Nigeria, we demand that the Federal Government provide answers to the following questions on their behalf:
1. Has the Federal Government accessed the loan?
2. Is the loan in the government’s borrowing plan as approved by the National Assembly?
3. Who are the parties to the loan, and what specific roles are they expected to play?
4. What are the conditions to the loan, including tenor, repayment terms, the collateral, and the interest rate?
5. And, lastly, why register an SPV in the Bahamas knowing the recent scandal of the country’s notoriety for warehousing unclean assets?
Signed:
Atiku Abubakar
Vice President of Nigeria, 1999-2007
25th January, 2024.
