UBA Consortium Pools $1.5bn Facility To Boost Nigeria’s Oil Output

As a pointer to the strength of the nation’s financial services industry, the United Bank for Africa Plc (UBA) recently acted as Initial Mandated Lead Arranger of a consortium of domestic and international banks in a $1.5bn Pre-Export Finance Facility for the Nigerian National Petroleum Corporation (NNPC) and its upstream subsidiary, the Nigerian Petroleum Development Company (NPDC).

The facility, according to a statement by UBA Group on Tuesday evening, is structured in two tranches, the first tranche of which is $1bn repayable over a five-year period to be provided in US$, with UBA acting as the Facility Agent Bank.

The second tranche of $500m, will be provided in local currency, over a seven-year period, with UBA acting as Lead Bank, providing $200m in Naira equivalent to support investment growth and liquidity requirements. Part of the facility aims to provide the much needed capital for investment in NNPC’s production capacity, which is of strategic importance to the Nigerian economy and a leading source of foreign exchange earnings.

Both facilities are repayable from an allocation of 30,000 barrels per day of NPDC’s crude oil, the statement added. 

UBA’s position as Mandated Lead Arranger, the statement added, 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 statement quoted UBA Group Chairman, Tony Elumelu as describing 2020 as “one of the most economically challenging years that Nigeria has witnessed (especially given) the sharp drop in the price of oil and the ensuing hardship that followed the onset of the Covid-19 pandemic.”

This, he explained, is one of the private sector’s collaborative efforts at contributing meaningfully to the economy, with UBA “providing investment that will significantly improve Nigeria’s production capacity and, in doing so, also demonstrating the strength, depth, and sophistication of our commercial banking capability.

“I believe that together, working with governments, we can create more jobs and more wealth for people, not only in Nigeria, but across Africa,” he stressed.

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

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

The statement noted UBA Group’s strong track record in the resources sector across Africa, having facilitated similar oil prepayment deals with the NNPC, as well as the EUR 240m Revolving Crude Oil Financing Facility for the Société Africaine de Raffinage, while co-funding the $250m crude oil prepayment facility for Orion Oil Limited in Congo Brazzaville.