PIA attracts $5bn Afreximbank funding for Nigeria’s oil industry

Nigerian National Petroleum Company (NNPC) Limited has secured a $5 billion corporate financial commitment from the African Export-Import Bank (Afreximbank) to fund major investments in Nigeria’s upstream sector.

For NNPC, securing the facility is a milestone, especially as it seeks to increase investments in the oil and gas industry.

The loan will provide a true platform for NNPC Limited to successfully implement the Petroleum Industry Act (PIA) in the industry.

The new legislation has provided business opportunities that will enable the NNPC to earn more revenue for the country and attract foreign direct investment (FDI) to Nigeria’s energy sector.

Therefore, the loan will serve as a facilitator for future projects.

Furthermore, the PIA has raised stakeholder expectations of the company, even as it has given it ample scope to stimulate investments in the oil and gas industry.

Under NNPC Ltd’s financing strategy for selected upstream investments, the company would raise between $3.5 billion and $5 billion as corporate funds to finance significant upstream investments.

An important result of this partnership with Afreximbank is supporting upstream capacity to boost energy supply.

There will be an acquisition of stakes in quality upstream oil and gas production assets, as is projected to help ease the energy supply and transition.

The prospective NNPC will assume ownership of the non-investor partner through the acquisition of preemptive rights in the Sample Joint Venture.

Additionally, NNPC’s strategy will also allow the company to invest in assets that address and reduce integrity issues, bottlenecks and growth challenges; It will also support the promotion of non-rig activities and drilling campaigns in the oil industry.

Regarding the repayment of the financing, it is expected that this will be done in a period of four to eight years in order to ensure the main fiscal obligations and the adequate discharge of operating expenses.

Meanwhile, an outgrowth of the collaboration will be to explore the innovative idea of ​​establishing a Pan-African Energy Transition Bank; NNPC Limited and Afreximbank have agreed to work on the modalities to achieve this goal.

The importance of an African power bank cannot be overstated as there is a need to cultivate a pool of investors who understand and appreciate the importance of oil and gas to the economic development of African nations.

While foreign capital is desirable, it has so far been unreliable for financing oil and gas investments in Africa.

Therefore, the establishment of institutions such as the African Power Bank will enable local oil and gas companies to boost the development of new and existing projects, ensure reliable financing channels for oil and gas, and position the continent as an exporter. net of hydrocarbons, while creating capital opportunities for renewable energy. Projects

Afreximbank is a pan-African multilateral trade institution created in 1993 under the auspices of the African Development Bank with a mandate to finance and promote trade within and outside Africa using three broad services.

The services are credit (commercial and project file), assumption of risks (guarantees and credit insurance) and commercial information and advisory services.

Afreximbank has 50 African member countries; as of June 2020, the bank had four regional locations and is in the final stages of establishing a fifth regional office for Central Africa.

NNPC Limited CEO Malam Mele Kyari and Afreximbank Chairman and President Prof. Benedict Oramah sealed the landmark agreement on behalf of their respective institutions in Cairo, Egypt.

Kyari was accompanied on the trip by the Official Officer, Umar Ajiya; Group Executive Director, Upstream, Ing. Adokiye Tombomieye; Group General Manager, NAPIMS, Mr Bala Wunti; the Managing Director, NNPC Trading, Mr Lawal Sade, and others.

In another development, the Federal Government has proposed to extend the implementation period of the elimination of subsidies for months, in a demonstration of concern for the economic well-being of its citizens.

The Minister of State for Petroleum Resources, Chief Timipre Sylva, said this during a special briefing on the fuel subsidy at the Presidential Villa, Abuja.

Sylva said the extension would provide all stakeholders with the necessary time to implement the necessary steps and palliatives that would cushion the effects of removing the subsidy, consistent with prevailing economic realities.

While dispelling fears of a possible gradual increase in fuel prices in the coming months, Sylva noted that all measures will be put in place to protect Nigerians from hardship.

In the aftermath of the ministerial briefing Senate President, Senator Ahmad Lawan, had called a meeting of critical stakeholders, where he urged the leadership of the Nigerian Labor Congress (NLC) to cancel the planned protest over the removal of subsidies.

Speaking at the same meeting, the Minister of Finance, Budget and National Planning, Ms Zainab Ahmed, said that the Federal Government reconsidered the planned removal of subsidies due to already high inflation.

According to her, removing the fuel subsidy at this time would impose more hardship on Nigerians.

He said this was against the wishes of President Muhammadu Buhari.

The minister said that before the elimination of the subsidy, a series of measures will be implemented to cushion the effects of the elimination.

This includes the deployment of an alternative to gasoline and the increase in the country’s refining capacity, among others.

Ahmed also stated that based on the reconsideration of the removal of the subsidy, the ministry would make the proper budget provision for the subsidy after June 2022.

For his part, the general director of the NNPC, Malam Mele Kyari, reiterated the NNPC’s commitment to the country’s energy security.

Stakeholders in the meeting included Senate Leader Yahaya Abdullahi; deputy whip Aliyu Sabi Abdullahi; the executive director of the Nigerian Midstream and Downstream Regulatory Authority, Farouk Ahmed; and the Executive Director of the Nigerian Upstream Regulatory Commission, Mr Gbenga Komolafe, Engineer.

Others are the Special Assistant to the President for Natural Resources, Habib Nuhu; Permanent Secretary, Federal Ministry of Fice, Aliyu Shehu Shinkafi, and Permanent Secretary, Ministry of Petroleum Resources, Nasir Sani-Gwarzo.

Still, in the week under review, the federal government announced plans for the full deployment of autogas at service stations and the conversion of 200,000 commercial vehicles to run on gas this year.

This is part of measures to cushion the impact of the proposed elimination of the gasoline subsidy.

Speaking at the meeting with key stakeholders at the Abuja of State for Petroleum Resources, Chief Timipre Sylva unveiled the 2022 Framework for the deployment of compressed natural gas (CNG), popularly called autogas in Nigeria.

The minister stated that the government was willing to ensure that it made the required alternatives available before the removal of the Premium Motor Spirit (PMS) subsidy, highlighting that the deployment of autogas was one of those key alternatives.

He also stated that the government would support them with 50 per cent of the conversion kits to speed up the process, adding that additional support would be provided as needed in the future.

Within the framework, the minister explained that with abundant gas reserves of some 206.53 billion cubic feet, a population of some 200 million people and the promulgation of the Oil Industry Law, which eliminated the continuous absorption of the subsidy to gasoline, it is now vital to deploy autogas.

Three implementation options were highlighted in the document, as the government stated that in the first option, its goal was to convert one million public transport vehicles and install 1,000 fueling centres in 36 months.

For the first 18 months, it plans to reach 500,000 conversions and 580 refuelling centres supplied to Equipment Manufacturers, among other objectives.

In the plan, the government plans to convert 200,000 commercial vehicles this year, including tricycles, cars, minibuses and large buses.

Cities captured in Phase 1 of the project include Abuja, Kaduna, Kano, Kogi, Kwara, Lagos, Ondo, Oyo, Edo, Delta, Bayelsa, Niger and Rivers.

The cities in Phase 2 were listed as Sokoto, Katsina, Jigawa, Borno, Bauchi, Gombe, Yobe, Osun, Ekiti, Enugu, Anambra, Imo, Cross River, Abia, Akwa Ibom, and Plateau.

Phase 3 would deal with towns such as Kebbi, Zamfara, Yobe, Gombe, Taraba, Adamawa, Benue, and Ebonyi.

Regarding the selection criteria for network operators, the government indicated that the marketer must own and/or operate a minimum of 21 stations nationwide.

The concessionaire must own or operate a minimum of five stations in each proposed city and must be willing to demonstrate creditworthiness and payment capacity within the stipulated term.

Officials from the Nigerian Major Petroleum Traders Association, the Nigerian Petroleum Products and Deposits Traders Association, as well as other key players in the downstream sector, attended the meeting.

Meanwhile, NNPC CEO/GMD Kyari has expressed his willingness to partner with Nigerian Communications Satellite Ltd. (NIGCOMSAT) to secure the company’s oil and gas facilities through Satellite Company’s various technological innovations.

Kyari made this commitment when she welcomed the administrative staff of NIGCOMSAT into her office led by Executive Director, Ms Abimbola Alale.

The NNPC CEO/GMD reiterated during the discussion the need for secure and reliable security services for NNPC facilities, especially those in remote areas.

The GMD also assured that with the organization’s new status as a limited liability company, NNPC, under its leadership and current management, will ensure that the company works for the good of all Nigerians and the country.

Some of the key projects proposed Communications On The Move (COTM) solutions that allow vehicles with flat panel antennas to connect to NIGCOMSAT Satellite to provide services in very remote locations.

Communications on the Go allows field workers to deploy satellite communications in a backpack.

Single-channel dedicated link per operator; SCPC, as redundancy (business continuity) NNPC links

And for NNPC to migrate its private satellite-based network to NIGCOMSAT Satellite in the C/Ku bands in a managed services agreement. (NAN)