Uche Usim (Abuja) and Adewale Sanyaolu
Efforts to secure funding for the nation’s critical assets in the oil and gas industry may have received the required attention as the African Export and Import Bank (Afreximbank) has pledged to partner the Nigerian National Petroleum Corporation (NNPC) to rehabilitate the refineries and construct pipeline assets.
Executive Vice President of Afreximbank, Mr. Amr.Kamel, stated this during a business visit to the Group Managing Director of NNPC, Mr.Melle Kyari, in company of other top officials of the bank.
Apart from financing refineries rehabilitation and other downstream projects, Kamel expressed interest in participating in some other projects such as the Ajaokuta-Kaduna- Kano (AKK) pipeline system.
Kamel said he was in NNPC to congratulate the GMD and his management team on behalf of the board and management of the bank.
He said the bank’s management team thought it imperative to interact with NNPC, being a key player in one of the most viable sectors of the Nigerian economy which is the largest in Africa, with a view to seeking collaboration on ways to further grow the oil and gas sector.
Responding, Kyari said the corporation was ready to collaborate with Afrexibank or any financial institution willing to finance its critical projects, especially refineries rehabilitation, downstream infrastructure, including pipelines.
The NNPC boss said the corporation was open to financial and technical partnership with reputable financial institutions like the Afreximbank to develop the Industry.
“We have a number of financing needs, it depends on how much you are bringing to the table. We need support particularly in refineries rehabilitation, depot optimisation and pipeline financing”, the GMD stated.
He assured the team of his readiness to work with the bank.
He added: “We will provide you with basic information. We are ready to talk to you”.
It was learnt that interest rates on pre-funding loan and commercial pricing for Direct Sale-Direct Purchase (DSDP) of crude between the NNPC and international oil companies, among few other concerns, are issues that stalled the provision of funds for the revamp of Nigeria’s refineries by private investors.
It was gathered that although everything required to get the rehabilitation of the refineries going had been progressed to an advanced stage, negotiations with the consortia of private sector financiers to secure funding for the project had stalled. Former NNPC GMD, Maikanti Baru, had stated that the negotiations “stalled as NNPC and the consortia have varying positions on key commercial terms.”
Baru explained that the development had led to a slight delay in the full take-off of the refineries’ rehabilitation project as scheduled.
He added, “Interest rates on pre-funding loan and commercial pricing for DSDP, among other commercial terms, have impacted finalisation of the funding agreements and first drawdown on funds to mobilise the original refinery builders to site.”
The DSDP arrangement between the NNPC and international oil companies basically allows the corporation to exchange crude oil with international oil traders for imported petroleum products over a period of time.