The Nigerian National Petroleum Company Limited, says it would prepay future royalties and taxes to the Federal Government from the $3.3bn financing deal it got from African Export-Import Bank last year.
NNPCL disclosed this in a document titled, ‘Frequently Asked Questions – Project Gazelle’, released by its Chief Corporate Communications Officer, Olufemi Soneye.
It explained that the loan would be used by the oil company to support the Federal Government in stabilising Nigeria’s exchange rate.
Providing more details about the deal on Sunday night in the document, the oil company said, “Everything you need to know about the NNPC Limited’s $3.3bn loan, also known as Project Gazelle.
“There has been a lot of interest from the public and stakeholders in recent weeks regarding the $3.3bn crude oil pre-payment loan, also known as Project Gazelle. This is a financing agreement secured by NNPC Limited to prepay future royalties and taxes to the Federal Government.”
The company also stated that it adopted a lower price benchmark for the $3.3bn crude-for-cash loan to reduce the risk of default and ensure financial stability.
Giving details on the benchmark oil price, the company said the facility was using a conservative crude price of $65/barrel to calculate the allocated crude to be produced and sold in the future.
Brent, the global benchmark for crude, is currently at about $78/barrel.
Commenting on the benchmark oil price of $65/barrel for the $3.3bn deal, the national oil firm said, “This provides a safety margin for price fluctuations in the future.
NNPCL also said repayments were strategically planned and tied to future oil sales, with conservative pricing in oil sales contracts mitigating the risks associated with oil price volatility.
