Consortium Denies Granting NNPC $1.56bn Loan Facility

THISDAY [01/03/13]

Chineme Okafor

  MD, NNPC, Andrew Yakubu  [SOURCE: http://www.thisdaylive.com]

The lingering controversy on the alleged procurement of $1.56 billion crude oil forward sales agreement put together by the Nigerian National Petroleum Corporation (NNPC) to offset legacy debts yesterday took a new twist when the consortium of banks involved in the deal denied granting the suspected loan.

A representative of the consortium of the Nigerian banks said to have facilitated the agreement, the facility remains an agreement for forward sale of crude oil and not financial loan.

Managing Director, Project and Export Finance of Standard Chartered Bank, Mr. Ade Adeola, made the clarification yesterday in Abuja in a presentation at the renewed hearing of the Joint Committee of the House of Representatives on the alleged transaction.

According to a statement from the NNPC, Adeola who spoke on behalf of the consortium of the participating banks restated that the said $1.56 billion facility was not a loan but forward sale of crude oil with advance deposits to be made to the corporation at its standard sale terms of ruling market prices.

The statement which was signed by the acting Group General Manager Public Affairs of NNPC, Tumini Green, noted that the Minister of Petroleum Resources, Mrs. Diezani Alison-Madueke, and the Group Managing Director of the NNPC, Andrew Yakubu, had early explained  in separate presentations to the House Committee that the $1.56 billion instrument was not a loan but a proposed forward sales agreement to enable the NNPC settle outstanding debt obligations.

Adeola in his explanation said the sales agreement being brokered by four Nigerian banks namely, First Bank, UBA, Ecobank and Standard Chartered Bank, was designed to enable NNPC reduce the debts accruing from petroleum products imports.

He said: “The key idea is to enable NNPC immediately raise the sum of US$1.5 billion to pay down outstanding debts.

This is based on a forward sale arrangement which allows a sale of agreed quantities of 15,000 barrels per day of crude oil for a period of five years in consideration of an advanced amount of US$1.56 billion paid to NNPC.”

He further stated that the sale of the crude oil by NNPC would be a true sale for which the sale price is calculated on the basis of the open market Nigerian crude oil selling price.

“The structure is the same as implemented on both international and other recent NNPC Joint Venture transactions and is therefore well understood by the international and local financing market,” Adeola added.

The statement also quoted the Group Executive Director, Corporate Services of the NNPC, Dr. Peter Nmadu, who stood in for Yakubu at yesterday session to have stated that as a public entity, the NNPC is always willing to cooperate with the National Assembly in the execution of the constitutional prescribed oversight function.

It added that the Chairman of Petroleum Resources (Upstream) Committee, in the House of Representative, Hon. Muraina Ajibola, also announced the indefinite adjournment of the public hearing.