By Stephen Ubanna
Between 2018 and now, the 22-year old, Nigerian Petroleum Development Company, NPDC, a wholly owned subsidiary of the Nigerian National Petroleum Corporation, NNPC and largest supplier of gas to the domestic market on the average of 700 million standard cubic feet per day had set production targets.
The company which currently produces 80,000 bd of Crude oil had set a production target of 300,000 bd in 2018 and 400,00 bd in 2019. The NNPC subsidiary was said to have also set a production target of 500,000 bd in 2020 but that was how far the NNPC, subsidiary could go. The Value News learnt that the projections were made in 2017, under the former Management Team led by Yusuf Katashi but it was never met.
The Company could not have achieved the production targets because of the financial constraints. The Financial situation was so bad that the subsidiary which has no money to develop its Oil Mining Leases, OMLs, according to sources had accepted bids from 14 local Companies for OML 119, an offshore acreage which holds two production fields collectively outputting about 20,00bd.
Recall that last July,NNPC had signed a Financial Transactions Services Agreement, FTSA, with an India, owned oil company, Sterling Exploration and Production company, SNEPCO, for the development of OML 13. It was sad to have also reached a similar FTSA, with a Nigeria company, CMES-OMS Petroleum Development Company. Investigations by The Magazine shows that the funding and technical services, however, still indicate the operator, which is NPDC, by other means.
Given the poor financial state of the Company, past and present Management of NNPC, were said to have tried to raise Funds for the subsidiary company in order to boost its oil and gas production. The latest effort was the sourcing of a $1.5 billion from both International and a Consortium of Local banks to sustain the NPDC, current production level of 80,000 bd.
The United Bank for Africa, UBA, plc, a Pan African Bank was said to have been appointed the Facilitator agent for the Facility meant to boost the NPDC oil and gas production and improve government earnings from its oil and gas productions. Other participants in the NNPC, Financial deal, according to insider sources include Standard Chartered Bank, Afrexim Bank, Union Bank and two oil trading companies. Also to have participated in the NNPC, oil deal were Vitol and Matrix.
The solid financial standing of the Pan African Bank may have informed why it has selected as the facility agent for the Consortium of Nigerian and International Banks to raise the $1.5 billion Pre-Export Finance facility for the NNPC and its subsidiary, NPDC.
The Magazine findings shows that UBA, alone is providing $200 million , or the naira equivalent to support the investment growth and liquidity requirements in the nation’s upstream sector. Many believe that the facility will provide the much needed Capital for investment in the NNPC , Production Capacity. This is because of its strategic importance to the economy.
Note that the Pan African Bank, which is the ountry’s leading source of foreign exchange earnings and facility agent for the NNPC, $1.5 billion facility, recognizes the strength in structuring and deploying Funds to the nation’s oil and gas sector and the depth and liquidity of its Balance Sheet, of the bank, according to sources remain unmatched by any other financial Institution across the country.
The $1.5 billion facility, the source said is structured in two tranches. It was gathered that the first tranche of $1 billion will be paid over a period of five years in dollars while the second tranche of $500 million will be provided in local currency , over a period of seven years. There are indications that the facility will be repaid from the allocation of 30 bd of NNPC Crude oil.
Not many people are surprised that UBA was selected as the facilitator agent of the $1.5 billion NNPC facility from both International and Consortium of Local Banks. This is because the bank has a strong track record in the resources sector across Africa, having facilitated the oil prepayment deals with the oil Conglomerate including its 2013 $100 million participation in the PXF Funding Limited transaction . This is in addition to a $60 million in the $2015 Phoenix Export Funding limited transaction.
Even in the West African country of Senegal, the bank was said to have been responsible for the EUR 240 million revolving Crude Oil Financing Facility for the Societe’ Afriaine de Raffinnage while in Congo Brazzaville, it co-funded the $250 million Crude oil repayment facility for Orion Oil Limited.
Tony Elumelu, Group Chairman, GC, of the Pan Afican Bank and founder Tony Elumelu Foundation, said the NNPC $1.5 billion deal has been ‘’ one of the most economically challenging year that Nigeria has ever witnessed’’ . He noted that ‘’with the sharp drop in the prices of oil in the International oil market and the ensuing hardship that followed the onset in the country of the Wuhan Town in Hebei Province of the Asian country of China emerged coronavirus popular COVID 19, had made it possible for the private sector to come together and contribute meaningfully to the economy.
Elumelu, the UBA GC, ho could not hide his feelings disclosed that ‘’ the $1.5 billion facility ’is a clear evidence of this coming together of the private to contribute to the development of the economy’’, stressing tha t’ the bank is proving investment that will significantly improve Nigeria’s oil production capacity’’.
He averred that in doing so, ‘’ the bank has demonstrated its strength , depth and sophistication of the nation’s Commercial banks capability’’. He declared, He further said that working with the government, would create more jobs and more wealth for the people of the African Continent.
Going by the Central Bank of Nigeria, CBN, records, UBA, is one largest employers of labour in the African Financial sector. At present, it has over 20 million Customers, operating in Nigeria and 20 other African countries including the United Kingdom, UK, the North American country of the United States and France, providing retail, Commercial and Institutional banking services.
This may have informed why Financial analysts described the Money Deposit Bank, MDB, as ’’the leading Financial inclusion that had been implementing its cutting edge technology’’ over other banks.