READ ALSO: ATIKU Queries Tinubu Over NNPCL $3.3b Emergency Loan (FULL TEXT)
AS a follow-up to SOJ WORLDWIDE’S publication on the query issued by the former Vice-President Atiku Abubakar to President Bola Ahmed Tinubu to explain the position of $3.3 billion emergency external loan by the Federal Government on behalf of the Nigerian National Petroleum Company Limited, NNPCL, we conclude with answers to the probing questions.
In response to Atiku’s Query, Tinubu itemised his response in sequence as requested.
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“The Project Gazzelle is such a straightforward deal that I do not expect Alhaji Atiku, who prides his whole political aspirations on being an economic reformer, to fumble the simple numbers behind it.
Talking about the FG owing Nigerians an explanation, Alhaji Atiku is late to the party, as usual, as the presidency had done the needful on explaining the deal to Nigerians few days ago.
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For record purposes and to save Alhaji from his self-imposed mystery, here are some explanations to his questions about the conditionalities of the loan in a simpler language.
1. The facility is a forward sales agreement between NNPC limited and an SPV(the buyer) where a predetermined number of barrels of oil is sold in advance at an agreed price.
2. The sales allow the seller (NNPCLtd in this case) to use the received payment to solve critical and urgent problems with forex scarcity as the problem in Nigeria’s case.
3. A lower benchmark is usually adopted as a safe haven for the buyer (the SPV) as oil price tends to remain unstable most times.
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4. For repayment, an eventual increase in oil prices will result in the SPV returning all excesses to the seller (NNPCLtd) while the risk which could lead to a rearrangement of the terms is a significant decrease in the agreed price (this case $65 per barrel).
5. Oil has been averaging $70-75 per barrel since the deal was agreed, and if things stay the same way, Nigeria will be getting refunds of excess amounts from the SPV once the payment is concluded.
6. There is a very big chance that the repayment will be concluded before the agreed time if oil prices continue to increase as NNPCL had penned a 90,000 barrel per day which will eventually be calculated at the current prices. Repayment stops when the agreed amount + interest is fully paid and Nigeria may be liable to refunds were there to be excesses.
I hope Alhaji Atiku, being an elder statesman, will allow the financial expert in charge of the country to continue devising innovative ways of funding our expenditures while he surfs his archives for more promising economists who will advice him duly before rushing to make public comments going forward.”
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