Why UBA Was Selected As A Facilitator Agent For A $1.5 Billion Facility For NNPC To Boost Its Oil And Gas Production In Post-COVID 19

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.

Mele Kolo Kyari: GMD, NNPC

 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.

Usman Yusuf: Managing Director, NPDC

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.

Leave a Reply

Your email address will not be published.