Nigeria’s National Economic Council (NEC) approved the refinancing of NNPC ​Limited’s $3.3 billion oil-backed pre-export finance facility, with a ‌new $4.5 billion arrangement aimed at strengthening the country’s external reserves and freeing up funds for infrastructure.

The presidency ​said late on Monday that the new facility, dubbed “Project ​Gazelle 2”, will refinance approximately $1.5 billion outstanding ⁠under the original 2023 deal while unlocking ​an additional $3 billion in liquidity. 

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The refinancing comes as Africa‘s third largest economy seeks to shore up its foreign reserves and fund ​fiscal priorities, amid persistent pressure on the ​naira currency and efforts to attract foreign investment through economic ‌reforms ⁠launched by President Bola Tinubu‘s administration.

If oil prices stay reasonably high, NNPC would have more flexibility to sell its oil – to generate more operating cash, to invest in production or to pay more dividends to the government.

I this way, the refinancing could improve NNPC’s cash flow even if it doesn’t immediately increase profits.

Finance minister Taiwo Oyedele told the NEC that the new terms were more favourable than the ​original facility, with ​pledged crude ⁠oil volumes cut 12.5 percent to roughly 78,750 barrels per day from 90,000.

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Vice President Kashim Shettima, who chairs the NEC, said government policies ⁠were ​ultimately measured by their impact ​on food prices, healthcare, education and household welfare, the presidency’s ​statement added.

Nigeria has long been one of Africa’s largest crude oil producers and exporters, but still imports much of its gasoline, having too few and poorly maintained oil refineries. 

(with Reuters)