The Nigerian National Petroleum Corporation (NNPC) is expected to use a large portion of the $1.5 billion oil prepayment deal with Vitol and Matrix Energy to pay taxes owed by its subsidiary, Nigerian Petroleum Development Company Ltd (NPDC).
The remainder will go towards operational expenses and capital expenditure, and could also fund an upgrade of the Port Harcourt refinery.
This is according to a report from Reuters, which disclosed that Nigeria signed a $1.5 billion oil prepayment deal with Vitol Group and Matrix Energy. The deal, which is a first of its kind since the pandemic, was led by Standard Chartered Bank.
Nairametrics understands that the deal was also backed by the African Export-Import Bank and United Bank for Africa. It guarantees that both Matrix and Vitol will receive 15,000 barrels of crude per day for five years starting from next month.
Why it matters: The deal will give Nigeria the cash it needs to take care of its budget issues. The country, which was already cash-strapped prior to the pandemic, suffered huge blows after global oil prices drastically declined earlier. The Nigerian government has since made several attempts to raise capital through different means, including local and foreign debt instruments.
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