Business News
Government approves funding standard for oil/gas industry
Jan 31, 2005, 15:26
| | The Federal Government on 29 January approved funding arrangements by the Nigerian National Petroleum Corporation (NNPC) and ExxonMobil for the Liquefied Natural Gas (LNG) project as the benchmark for all alternative oil and gas funding schemes in the country.
Group Managing Director of the NNPC, Mr Funsho Kupolokun stated this in London at the signing ceremony of the $1.3 billion Phase II LNG project.
He said raising funds for the project set a new benchmark because it creates a paradigm shift in which NNPC’s joint venture partner is not required to finance the Corporation’s equity interest.
NNPC could not have raised funds for the project without the possibility of an alternative funding scheme through third party financing.
Credit Suisse First Boston (CSFB) of the United States (US) initiated funding agreements for the LNG Phase II project in September 2004 in collaboration with three Nigerian banks that would attract an interest rate of six percent.
The New York-based CSFB will provide a 12-year tenure loan of $575 million, out of which, $325 million has been guaranteed by the Overseas Private Investment Corporation (OPIC).
Nigerian banks, namely Union Bank, United Bank for Africa and Standard Trust Bank will provide $50 million.
Kupolokun further stated that NNPC would be spending between four and five billion dollars within the next four years on new gas projects in a bid to raise the level of gas utilisation in the country.
International bankers and lenders, he noted, are beginning to feel comfortable with the Nigerian business scene, which is why the amount for the gas project has been raised.
Kupolokun also commended the involvement of local banks in financing various LNG projects to the tune of $220 million (N29.2 billion).
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