Tony Elumelu is balling hard and eating well under this government, as his bank, UBA, is expected to earn $66 million (66 billion naira ) in commission from arranging and facilitating the Afrexim-NNPC $3.3 billion loan, but that is not the final story.
Last year, Nigeria ran out of dollars, so the price of the dollar on the black market went haywire and touched a new low.
NNPC GMD, Kyari who wanted to be in the good books of Bola Ahmed Tinubu and see how to possibly get his second term in office as NNPC GMD approved, had a brainwave that he could get $3 billion from Afrexim Bank, based in Cairo, to stabilise our bartered local currency.
UBA was picked by NNPC to be the lead facilitator the whole project and transaction.
NNPC GMD understood very well that the UBA majority shareholder is in the good books of this government, so he did not think twice about selecting UBA as the lead facilitator.
The agreement with Afrexim Bank was struck last year, and these are the key points you should know.
1) Nigeria pledged a total of 164.25 million barrels of crude oil—at 90,000 barrels per day—starting in 2024 to repay the loan through Project Gazelle Funding Ltd., an “orphan” special purpose vehicle (SPV) incorporated in the Bahamas for the PxF.
Effectively, the NNPC has pledged 38.58 percent of five years’ worth of tax and royalty oil to secure the loan.
2) Nigeria pledges over $12 billion worth of oil.
At the beginning of 2024, a barrel of Nigerian oil was sold on the international market for $77.93 per barrel, according to the Central Bank of Nigeria (CBN) data.
At the current price, the 164.25 million barrels of oil pledged by Nigeria equal $12.8 billion—about three times more than the facility taken.
What this means is that Nigeria is borrowing $3 billion and will pay back $12 billion.
3) To make the repayment, the NNPC will forward-sell 90,000 barrels per day of Nigeria’s share of offshore crude oil under the production sharing contract (PSCs) with the oil companies.
4) Under the Production Sharing Contract (PSC), the oil companies operating in Nigeria usually pay royalties and taxes by giving the oil equivalent to the Nigerian Upstream Petroleum Regulatory Commission (NUPRC) and the Federal Inland Revenue Service (FIRS), respectively.
The NNPC in turn exports the oil on behalf of NUPRC and FIRS and remits the proceeds to the agencies.
This is part of the revenues paid into the federation account and shared by the three tiers of government.
But under this agreement, the revenue from 90,000 barrels per day will be used to service the loan in the next five years.
5) The loan arrangers, of which UBA is the lead facilitator, will get a commission of $66 million, or 2 percent of the facility.
6) Nigeria will pay an interest rate of 11.85 percent per annum on the $3.3 billion “pre-export finance facility” (PxF) facilitated by the Nigerian National Petroleum Company (NNPC) Ltd. and arranged by Afrexim Bank.
7) The money has been disbursed and is currently with the Central Bank of Nigeria.
Tony Elumelu had a good year last year.
Transcorp Hotel was the best-performing stock on the Nigerian stock exchange for 2023.
All the publicly quoted businesses that he runs had their valuations tripped over night.
From Transcorp Group to UBA to United Capital and African prudential
They all experienced double-digit growth in their valuations and then revenue, and because of this
Our celebrity billionaire, Tony, is on course to join the Forbes billionaire club in the next few years because of the good year he had last year.
Starting the year with this NNPC job shows that man is not slowing any time soon.
He made a bet by supporting this government. It worked for him, and he had been eating well since that time.
Flavour must have had him in mind when he sang Agba Baller, because for me
He is the poster boy for that song.
Chukwudi Iwuchukwu
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