NNPC seeks $1bn oil prepayment deal to revamp Port Harcourt refinery

The Nigerian National Petroleum Corporation (NNPC) is seeking a $1 billion oil prepayment deal to revamp its moribund Port Harcourt refinery.

According to Reuters, once the refurbishment is completed, the money would be repaid through deliveries of crude and products from the refinery over a seven year period. 

African Export-Import Bank (Afreximbank) is reported to be leading the financing.

“Afreximbank is looking into a facility for the refurbishment of the Port Harcourt refinery. However, the borrower is yet to be determined,” a spokesman for the bank said.

The sources also said talks were taking place with a range of foreign and Nigerian trading houses.

An unnamed source at a foreign bank said it was unlikely to participate in Nigeria’s latest effort because of lower credit availability and increased reluctance to take out exposure in a high risk country.

Prepayment agreements are commonly used as a financing tool in the commodities market and the NNPC has entered into such agreements in the past.

In July, Vitol Group and Matrix Energy backed by banks agreed to lend NNPC $1.5 billion to support the Nigerian Petroleum Development Compancy (NPDC), its upstream arm.

Nigeria currently has 4 refineries situated in Kaduna, Warri and Port Harcourt which have been shut down.

In December, Timipre Sylva, minister of state for petroleum resources, had said the refinery rehabilitation exercise across the country is in its final stages.

“The Nigerian National Petroleum Corporation (NNPC), on December 1, 2020, opened bids for the engineering, procurement and construction (EPC) contracts for the rehabilitation of the refinery,” the minister had said.