Oando hauls in $550 m for NNPC’s Project Gazelle

• Regains position at JSE

Sopuruchi Onwuka

Strong financial performance of Oando Plc in 2023 has not only reactivated investors’ interest in the company’s shares but also enabled the indigenous energy company to lead collaboration in raising $925 million for the Project Gazelle of the Nigerian National Petroleum Company (NNPC) Limited.

By taking responsibility for $550 million in the funding arrangement, Oando on May 17 led successful closure of a US$925m accordion arranged and coordinated by African Export-Import Bank (Afreximbank) for Project Gazelle.

The $550 million contribution in the accordion arrangement flowed from Oando Trading, a subsidiary of Oando PLC. The balance $375 million was raised by other parties in the initial funding deal which is part of a comprehensive $3.3 billion structured crude oil-backed forward-sale finance facility sponsored by the NNPC Limited.

This landmark $3.3 billion Afreximbank-arranged financing is the largest syndicated loan ever raised by Nigeria in the international market and one of the largest syndicated debts raised in Africa in recent years.

Group Chief Executive of Oando PLC, Wale Tinubu, declared that “the successful completion of this facility signifies another win for the company and the country at large. The transaction further reinforces Oando’s ability to create value and the company’s status as the indigenous partner of choice in Nigeria.

“As a proudly indigenous company our ambition has always been to use our platform to support the sustainable development of the nation. Against this backdrop, Project Gazelle will be instrumental in realizing the Federal Government’s efforts to boost the country’s socioeconomic indices.

Afreximbank had earlier declared that it finalized the $925 million accordion disbursement for Project Gazelle Funding Limited under the syndicated US$3.3 billion crude oil-backed prepayment facility sponsored by the NNPC Limited and thus bringing the total current funded facility size to $ 3.175 billion.

Afreximbank stated separately that the $925 million was raised from “a consortium of crude oil off-taker lenders including but not limited to the Oando Group and Sahara Energy Resource Limited.”

The bank clarified that $925 million from Oando and others follows the success of the first accordion tranche of $2.25 million in December 2023, adding up the disbursed amount to $3.175 billion.

President and Chairman of the Board of Directors of Afreximbank, Prof. Benedict Oramah, said: “The milestone achieved thus far, on this facility, demonstrates the Bank’s capabilities in performing its role as a crucial development partner for Africa. It reaffirms our commitment to assisting our member states in their efforts to achieve economic growth and stability. This funding will greatly support the attainment of Nigeria’s short and long-term economic development priorities.”

Prof. Oramah described the original facility as ‘a landmark’ for being the largest crude oil-backed facility in Nigeria and one of the largest syndicated debts raised in Africa, adding that the closure of the first accordion demonstrated the existence of positive market appetite for well structured commodities-backed instruments.

Project Gazelle is a US$3.3 billion structured crude oil-backed forward-sale finance facility sponsored by the NNPC Limited in a unique financing arrangement is a first of its kind in Africa’s largest economy.

It is designed to enable the much-required foreign exchange injection into Nigeria’s economy, help the government meet its immediate obligations, enable investments in critical projects to boost production and generate increased revenues. The expected revenue from the national oil company’s operations would be used in paying off the facility over a 5-year period.

Project Gazelle is conceived for independent companies like Oando to provide immediate to medium term funding to enable NNPC Limited invest in critical areas of its operations at a time traditional partners of government are backing away from fresh investments in the sector.

Group CEO of NNPC Limited, Mele Kyari, commended Afreximbank on their investment philosophy and active interest in co-creation of prosperity.

“The successful disbursement of the first accordion under project Gazelle and its interest in funding viable and strategic projects is a clear indication of investors’ confidence in NNPCL and Nigeria’s growth aspirations,” Kyari stated.

He further assured Afreximbank and the investing community of NNPC’s resolve to continue to grow the nation’s hydrocarbon resources and strengthen its partnerships across the oil and gas value chain locally, and globally.

Oando’s investment in Project Gazelle follows the company’s strong financial performance in the 2023 when it’s its audited 2022 and interim 2023 results posted solid revenue records. The company’s rising revenue flow and proportionate profits have since rekindled investors’ interest at Nigerian and Johannesburg’s bourses.

The company announced the lifting of the suspension of the company’s secondary securities listing on the Johannesburg Stock Exchange (JSE) after a two-month suspension. The JSE’s recent action indicates positive signals from the company’s operating results.

In Nigeria, Oando also saw a positive swing in its NGX share price appreciating by 52.8% between April 28 and June 6, 2024.