UBA donates $200m facility to boost Nigeria’s oil production

The logo of the united bank of Africa (UBA)
Ernest Sunday

Following the ongoing fall in the oil price, the United Bank of Africa (UBA) has pledged a facility worth $200 million to Nigeria to help the country boost its oil production capacity.

The facility will be part of the $1.5 billion Pre-Export Finance facility provided by different commercial companies in Nigeria and international banks.

UBA serves as the arranger in crude sales for both Nigerian National Petroleum Corporation, NNPC, and its upstream subsidiary, the Nigerian Petroleum Development Company, NPDC.

The bank in stressing about the importance of the $1.5 billion facilities announced its support in the growth of the oil production with $200 worth facility.

It statement it said: “The facility will provide much-needed capital for investment in NNPC’s production capacity, which is of strategic importance to the Nigerian economy and the country’s leading source of foreign exchange earnings.

“UBA’s position as Lead Arranger recognises the Group’s strength in structuring and deploying financing to the oil and gas sector, and the depth and liquidity of the Group’s balance sheet.

“The $1.5 billion facilities are structured in two tranches. The first tranche of $1 billion, to be repaid over a period of five years, will be provided in dollars, with UBA acting as the Facility Agent Bank.

“The second tranche of $500 million, will be provided in a local currency, over seven years, with UBA acting as Lead Bank, providing $200 million in naira equivalent.

“Both facilities will be repaid from an allocation of 30,000 barrels per day of NPDC’s crude oil.

"UBA has a strong track record in the resources sector across Africa, having facilitated oil prepayment deals with the NNPC, including its 2013 $100 million participation in the PXF Funding Limited transaction, and a further $60 million in the 2015 Phoenix Export Funding Limited transaction.

“In Senegal, UBA was responsible for the EUR 240 million revolving crude oil financing facility for the Société Africaine de Raffinage and in Congo Brazzaville co-funded the $250 million crude oil prepayment facility for Orion Oil Limited.

“Other participants in the NNPC deal include Standard Chartered Bank, Afrexim Bank, Union Bank, and two oil trading companies, Vitol and Matrix.”

Speaking on this development, UBA Group Chairman Tony O. Elumelu stated, “This has been one of the most economically challenging years that Nigeria has witnessed.

“With the sharp drop in the price of oil and the ensuing hardship that followed the onset of the Covid-19 pandemic, the private sector must come together and contribute meaningfully to the economy.”

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