By Adewole Kehinde
“NNPC’s $3bn loan, FG’s dubious attempt to stabilize naira, says Atiku’s aide.” The publication was referred to the Special Assistant on Public Communication to former Vice President Atiku Abubakar, Mr Phrank Shaibu.
When I saw the headline, I knew it would come from the other side of the ruling government. I don’t blame most of them in the opposition because they can never see anything good in whatever the ruling party is doing.
It is unfortunate for Phrank Shaibu to say, “The NNPCL boss, Mele Kyari, who is also desperate to retain his job, has allowed himself to become a willing political tool just like Emefiele”.
Phrank Shaibu needs to go and study who Mele Kyari is. Mele Kyari is popularly referred to as ‘Grand Chairman’ by colleagues, friends, and admirers alike because he was once Group Chairman of NNPC PENGASSAN (Petroleum and Natural Gas Senior Staff Association of Nigeria), so Kyari is not desperate to retain any job because this is a man who has spent over 35 years in the gas and oil sector.
Now to the subject matter: amid the dwindling fortunes of the naira, the Nigerian National Petroleum Company Limited, and the African Export-Import Bank jointly signed a commitment letter and term sheet for an emergency $3 billion crude oil repayment loan.
This came at a time when some experts said investors were losing confidence in the body language of President Bola Tinubu and those around him, especially in what they called policy summersaults after the initial decision to altogether remove fuel subsidy and encumbrances around the naira that led to arbitrage and widespread corruption that nearly grounded the economy.
Some are asking what the $3 billion loan is about. Well, the loan is not a crude-for-refined product swap but an upfront cash loan against proceeds from a limited amount of future crude oil production, and the loan is not risky for NNPC Ltd. because the exposure for the company is very limited, and additionally, there are no sovereign guarantees tied to this loan.
In an actual sense, the loan will assist Nigerian National Petroleum Company Limited in settling taxes and royalties in advance. It will also equip the Federal Government with the necessary dollar liquidity to stabilize the naira with limited risk.
This loan will be released in stages or tranches based on the specific needs and requirements of the federal government. We should not forget that a strengthened naira as a result of this initiative will lead to a reduction in fuel costs. This means that if the naira appreciates in value, the cost of fuel will drop, and further increases will be halted.
Some have asked if the subsidy is coming back due to the loan, but from the explanation so far, the answer is no. A stronger naira will result in lower prices than at the current level, making subsidies unnecessary. The deregulation policy remains unchanged.
The loan will be repaid with a fraction of the proceeds from future crude oil production. It’s a strategic move that ensures a balance between our current economic needs and future production capabilities. The difference between this and previous swap deals is that this is not crude for refined product agreements where the government does not earn any proceeds from the swap.
To me personally, the move of the GCEO of Nigerian National Petroleum Company Limited would provide succour and ease the suffering of the Nigerian masses affected by the current economic squeeze.
I recalled that on January 27, 2022, Mele Kyari secured a $5 billion commitment from Afreximbank to fund Nigeria’s upstream sector.
Politics shouldn’t make us always condemn what will make the nation progress. Mele Kyari is driven by a strong ambition to elevate the oil and gas industry to a level where it can compete globally and withstand the test of time.
President Tinubu greatly benefited from Kyari’s sage advice during the elimination of subsidy since it allowed him to direct the money to more important and advantageous uses, such as improving security, health care, education, and infrastructure.
Nigerians, especially those who want the nation to progress, should commend Mele Kyari, who has made a number of efforts to make life easier for the average person. He also runs the NNPC Limited with an unparalleled level of transparency and accountability and has achieved record-breaking financial success.
I could remember that Kyari led the oil and gas industry’s effort to support the past government to limit the dread of the deadly Coronavirus pandemic in Nigeria.
He provided leadership to the decision to establish the Petroleum Industry Intervention Fund, on whose platform the oil and gas industry mobilized about N21 billion to finance the provision of medical facilities and other interventions to curb the spread of the virus in the country’s six geo-political zones.
He is doing the same now again by mobilizing a $3 billion loan that will equip the Federal Government with the necessary dollar liquidity to stabilize the Naira with limited risk.
Adewole Kehinde is the publisher of Swift Reporters. He can be reached at 08166240846.
