01 March 2013, Abuja – The controversy surrounding the planned procurement of $1.56 billion forward sales agreement package by the Management of the Nigerian National Petroleum Corporation, NNPC, to offset debt obligation has been laid to rest by the representative of the consortium of Nigerian banks said to have facilitated the agreement.
In a presentation at the renewed hearing of the Joint Committee of the House of Representatives on the alleged transaction, Mr. Ade Adeola, Managing Director, Project and Export Finance of Standard Chartered Bank, who spoke on behalf of the Consortium of banks restated the fact that the said $1.56 billion facility is not a loan but forward sale of crude oil with advance deposits to be made to the Corporation on standard NNPC sale terms at prevailing market prices.
Before now, the Minister of Petroleum Resources, Diezani Alison-Madueke and the Group Managing Director of the NNPC, Andrew Yakubu had in separate presentations to the House Committee explained that the $1.56billion instrument was not a loan but a proposed forward sales agreement to enable the NNPC settle outstanding debt obligations.
Lending credence to this position, Mr. Adeola explained that the sales agreement which is being brokered by four Nigerian banks namely First Bank, UBA, Eco Bank and Standard Chartered Bank is designed to enable NNPC reduce the debts accruing from petroleum products imports.
“The key idea is to enable NNPC immediately raise the sum of US$1.5 billion to pay down outstanding debts. This is based on a forward sale arrangement which allows a sale of agreed quantities of 15,000 barrels per day of crude oil for a period of five years in consideration of an advanced amount of US$1.56billion paid to NNPC,” Adeola explained.
He explained that the sale of the crude oil by NNPC will be a true sale for which the sale price is calculated on the basis of the open market Nigerian crude oil selling price.
“The structure is the same as implemented on both international and other recent NNPC Joint Venture transactions and is therefore well understood by the international and local financing market,’’ Adeola told the House Committees .
In his contribution, Group Executive Director, Corporate Services of the NNPC, Dr. Peter Nmadu who stood in for the Group Managing Director in Thursday’s session stated that as a public entity, the NNPC is always willing to cooperate with the National Assembly in the execution of the constitutional prescribed over sight function.
Hon. Muraina Ajibola, Chairman of Petroleum Resources Upstream, announced the indefinite adjournment of the Public Hearing.
*NNPC Press release