UBA supports Nigeria’s Petroleum sector with $200m

Chinazor Megbolu |

The United Bank for Africa Plc (UBA) has supported the investment and liquidity drive of the nation’s petroleum sector with $200 million.

This was announced on Tuesday, which has made the the leading Pan-African bank to act as lead arranger for $1.5 billion facility to boost Nigerian oil production and Government revenue.

The bank has acted as the lead arranger of a consortium of Nigerian commercial and international banks in a $1.5 billion pre-export finance facility for the Nigerian National Petroleum Corporation (NNPC) and its upstream subsidiary, the Nigerian Petroleum Development Company (NPDC).

The UBA is supporting with $200 million to boost investment growth and liquidity requirements.

It was gathered that the initiative will provide much-needed capital for investment in NNPC’s production capacity.

The capacity, the financial organisation pointed out, is of strategic importance to the country’s economy and the nation’s leading source of foreign exchange earnings.

The move shows that UBA’s position as lead arranger recognises its strength in structuring and deploying financing to the oil and gas sector, noting the depth and liquidity of the balance sheet.

However, the $1.5 billion facility is structured in two tranches, with the first tranche of $1 billion, which is repayable over a period of five years and will be provided in dollars, with UBA as the facility agent bank.

Moreover, the second tranche of $500 million, will be provided in local currency, over a period of seven years, with UBA acting as lead bank with the provision of $200 million in Nigerian currency.

The report further stated that the facilities will be repaid from an allocation of 30,000 barrels of NPDC’s crude oil daily.

Meanwhile, the rest who are participating in the deal are; Standard Chartered Bank, Afrexim Bank, Union Bank and Vitol and Matrix, which are two oil trading organisations.

According the Group Chairman, UBA, Mr. Tony Elumelu; “this has been one of the most economically challenging years that Nigeria has witnessed.

With the sharp drop in the price of oil and the ensuing hardship that followed the onset of the Covid-19 pandemic, the private sector must come together and contribute meaningfully to the economy.

“This facility is clear evidence of this – UBA is providing investment that will significantly improve Nigeria’s production capacity and in doing so also demonstrating the strength, depth, and sophistication of our commercial banking capability.

“I believe that together, working with governments, we can create more jobs and more wealth for people, not only in Nigeria, but across Africa’’