Key takeaways:
- Nigeria’s approved refinancing NNPC’s $3.3 billion oil-backed facility
- The deal refinances roughly $1.5 billion still outstanding from the original 2023 loan
- Pledged crude oil volumes backing the facility have been cut to 12.5%
Nigeria’s National Economic Council (NEC) on Monday approved the refinancing of NNPC Limited’s $3.3 billion oil-backed pre-export finance facility through a new $4.5 billion arrangement aimed at strengthening the country’s external reserves and freeing up funds for infrastructure, the presidency said.
The new facility, dubbed “Project Gazelle 2,” will refinance approximately $1.5 billion still outstanding under the original 2023 deal while unlocking an additional $3 billion in liquidity, according to the presidency statement.
The refinancing comes as Nigeria seeks to shore up its foreign reserves and fund fiscal priorities amid persistent pressure on the naira and ongoing efforts to attract foreign investment through economic reforms launched by President Bola Tinubu’s administration.
The Finance Minister Taiwo Oyedele told the council that the new facility carries more favorable terms than the original arrangement, with pledged crude oil volumes cut 12.5% to roughly 78,750 barrels per day, down from 90,000 bpd.
Oyedele said the revised structure would free up resources for strategic national priorities while improving Nigeria’s overall financing structure.
On his part, the nation’s Vice President Kashim Shettima, who chairs the council, said government policies are ultimately measured by their impact on food prices, healthcare, education and household welfare, according to the presidency statement.
What Project Gazelle 1 looked like
The original Project Gazelle facility dates back to August 2023, when NNPC secured a $3.3 billion emergency crude repayment loan from the African Export-Import Bank to help stabilize the naira and support the federal government’s foreign exchange obligations.
The loan was structured as a pre-export finance facility carrying an interest rate of 11.85% per year, with Project Gazelle Funding Limited, a special purpose vehicle incorporated in the Bahamas, serving as the borrower and NNPC as the sponsor repaying the debt with crude oil.
Under the original deal, NNPC pledged a total of 164.25 million barrels of crude, delivered at a rate of 90,000 barrels per day starting in 2024, to prepay future royalties and taxes owed to the federal government.
Afreximbank disbursed the facility in stages, first releasing $2.25 billion in January 2024, followed by an additional $925 million accordion disbursement in June 2024.
By the end of 2024, NNPC had drawn a cumulative ₦4.9 trillion under the arrangement and repaid ₦991 billion worth of crude, leaving a balance of ₦3.8 trillion still outstanding.
Why Nigeria is refinancing now
According to the finance minister, the move to refinance Project Gazelle comes as Nigeria continues to lean on oil-backed financing structures to manage fiscal pressures and support the naira, even as the country works to diversify its revenue base and reduce dependence on volatile oil markets.
Reducing the daily crude commitment under the new facility, while extending additional liquidity, reflects an attempt to ease the strain such prepayment arrangements place on Nigeria’s crude export volumes, which remain central to both government revenue and foreign exchange supply.
