Nigeria approves USD4.5 billion NNPC oil-backed refinancing to boost reserves

Nigeria’s National Economic Council (NEC) has approved the refinancing of Nigerian National Petroleum Company (NNPC) Limited’s USD3.3 billion oil-backed pre-export finance facility through a new USD4.5 billion arrangement, the presidency said on Monday, as the government seeks to strengthen foreign exchange reserves and unlock funding for infrastructure projects.

The facility, known as Project Gazelle 2, will refinance about USD1.55 billion outstanding under the original 2023 transaction while providing an additional USD3 billion in fresh liquidity, according to a statement issued after the council meeting.

The refinancing comes as President Bola Tinubu’s administration presses ahead with economic reforms aimed at stabilising the naira, rebuilding foreign reserves and restoring investor confidence after a series of currency and fiscal reforms launched since taking office.

Finance Minister Taiwo Oyedele told the council that the new facility carries more favourable terms than the original agreement, including a reduction in crude oil pledged as collateral.

Under the revised structure, pledged crude volumes will fall by 12.5% to about 78,750 barrels per day from 90,000 barrels per day, freeing additional oil production for government use while improving Nigeria’s financing profile, the presidency said.

The government said the refinancing would increase fiscal flexibility by restructuring existing obligations rather than adding to immediate debt pressures, allowing more resources to be directed towards infrastructure and other development priorities.

Oil-backed financing has become an important funding tool for Nigeria as the government seeks to plug budget gaps, support public spending and rebuild external buffers. The country has also stepped up efforts to raise crude production, curb oil theft and attract investment into its energy sector after output was constrained in recent years by pipeline vandalism and underinvestment.

Africa’s largest oil producer has relied on a mix of fiscal reforms, exchange-rate liberalisation and tighter monetary policy to address chronic foreign currency shortages and improve access to international capital.

Vice President Kashim Shettima, who chairs the National Economic Council, said the success of government policies should be judged by their impact on ordinary Nigerians.

“The true measure of our policies is whether they reduce the cost of living, improve access to healthcare and education, and raise household incomes,” the presidency quoted Shettima as saying.

The National Economic Council, which comprises senior federal officials and Nigeria’s 36 state governors, coordinates economic policy between the federal and state governments. The approval of the refinancing