Last week, five Nigerian banks—United Bank for Africa (UBA), Zenith Bank, First Bank of Nigeria, Standard Bank and Stanbic IBTC Bank—pulled resources together to provide indigenous oil producer, Seplat, with a $1.4 billion loan. This implies that the Nigerian banking sector, despite rewriting loans benchmarked with a higher oil price value in 2014, still perceives the oil industry as very attractive.

One of the immediate effects of Nigeria’s local content development thrust was the empowerment of the local oil producers, further bolstered by the recent wave of divestments of oil producing assets by the International Oil Companies (IOCs) operational in Nigeria. However, access to funding has been an impediment for the indigenous players who are eager to consolidate their position in the Nigerian petroleum industry.

The facility includes a $700 million seven year secured term package with an option to upsize by up to another $700 million for qualifying acquisition opportunities. The financing is aimed at refinancing Seplat’s existing debt portfolio to ensure a robust capital structure and strategically position the Company for future oil and gas acquisition opportunities in Nigeria. For the same reason, a new $300 million three year secured revolving credit facility was also provided concurrently by international banks.

The deal was constructed such that FBN Capital acted as “Structuring Bank,” while UBA and Zenith Bank contributed the bulk of the funding. “This successful re-financing, which commenced several months ago, significantly enhances our already robust capital structure and underscores the quality of our asset base,” said Austin Avuru, CEO of Seplat.

The further empowerment of Nigeria’s indigenous oil producers will be pivotal to opening up the full potentials of the country’s oil and gas industry while making the nation’s oil wealth inclusive and accessible to more locals. The desirable effects will translate in more job creation, more revenues accruable to the Federal Government by way of taxes, and more investments flowing into the sector.

By Emmanuel Iruobe

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