Despite the immediate
advantages stemming from NNPCL's $3 billion commitment letter and term sheet
for an urgent crude oil repayment loan, JOSEPH INOKOTONG discusses the
necessity for complete transparency.
The recent declaration from the Nigerian National Petroleum
Company Limited (NNPCL) about its successful acquisition of a $3 billion loan
from Afreximbank garnered a mix of responses.
In theory, the news should have prompted enthusiastic celebration
due to the clear influence that an additional $3 billion injected into the
nation's foreign exchange (FX) market could exert on the overall economy.
However, this anticipated reaction did not materialize for reasons that remain
unclear.
In some quarters, it was discussed in hushed tones, while experts
probed further into what some term as an opaque nature of the whole
transaction, which they said was lacking in full disclosure. The criticisms of
the paucity of information about the facility by some Nigerians kept pouring in
despite the explanation by the NNPCL of the benefit of the loan to the Nigerian
economy.
The obviously elated Group Managing Director of the NNPCL, Mr Mele
Kyari, did not waste time in explaining its benefits to Nigerians. He went
ahead to throw more light on the loan and how the country stands to benefit
more from it.
The first task for Mr Kyari was to explain if and how the loan
would affect fuel prices. The NNPCL boss said, “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.” On if subsidies will come back, he stated, “No. A
stronger naira will result in lower prices from the current level, making
subsidies unnecessary. The deregulation policy remains unchanged.” On how the
loan would be repaid, he said, “The loan will be repaid against a fraction of
proceeds from future crude oil production. It is a strategic move that ensures
a balance between our current economic needs and future production
capabilities.
Trying to calm the nerves of many Nigerians who were uncomfortable
with the handling of the swap deals the NNPCL had entered into in the recent
past, Kyari stated the difference between the loan and crude oil swap deals,
pointing out that “This is not a crude for refined products agreement where the
government does not earn any proceeds from the swap.”
Such a brilliant presentation ought to have attracted commensurate
commendation, which it did.
Source: NNT
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