The new facility, dubbed "Project Gazelle 2", was approved at the 159th NEC meeting held virtually on Monday and chaired by Vice President Kashim Shettima. It will refinance approximately $1.5 billion outstanding under the original 2023 deal while unlocking an additional $3 billion in liquidity.
Improved Terms and Reduced Crude Commitment
Finance Minister Taiwo Oyedele told the NEC that the refinancing had been negotiated on significantly more favourable terms than the original agreement. The volume of crude oil pledged as collateral has been reduced from 90,000 barrels per day to approximately 78,750 bpd, representing a 12.5 percent reduction.
This means an additional 11,250 barrels per day will be freed for the federation, allowing the government to earn more revenue from crude sales outside the financing arrangement. "While accessing additional liquidity on improved terms, the arrangement is freeing up resources for strategic national priorities while strengthening the country's financing structures," Oyedele explained.
Background: Project Gazelle
Project Gazelle was launched by the former administration to provide NNPC with the liquidity it needed to meet its obligations to the federation. The facility is structured as a pre-export finance arrangement, using Nigeria's crude oil exports as collateral to secure funding from international lenders.
The original $3.3 billion facility was signed in 2023 with a consortium of international banks, including Afreximbank, to provide NNPC with the working capital it needed to fulfil its cash-call obligations and support its operations. The facility was seen as a critical component of the government's strategy to stabilise the upstream sector and ensure continued crude production.
Strategic Rationale
The refinancing is part of a broader strategy to strengthen Nigeria's external reserves position and support the country's economic stability. By refinancing the existing facility on more favourable terms, the government aims to reduce the cost of borrowing while freeing up additional resources for critical infrastructure spending.
The approval of the refinancing comes amid ongoing efforts to stabilise Nigeria's economy and improve its fiscal position. The government has been working to reduce its debt burden and attract foreign investment, while the Central Bank of Nigeria has been focused on stabilising the naira and rebuilding external reserves.
The new facility is expected to provide immediate liquidity relief while also improving the country's financing structures for the long term. It also reflects the international banking community's continued confidence in Nigeria's oil sector and its ability to service its debt obligations.
Economic Implications
The refinancing has significant implications for Nigeria's fiscal position. By reducing the volume of crude pledged as collateral and securing more favourable terms, the government will have access to additional revenue that can be directed towards infrastructure, social services and other priority areas.
The move is also likely to be welcomed by investors, who have been watching Nigeria's fiscal position closely. The refinancing demonstrates the government's commitment to improving its debt management and creating a more stable economic environment.
With reporting from Premium Times, Daily Trust, The Sun Nigeria, Vanguard and the National Economic Council.
