Photo caption: Afreximbank logo
The African Peer Review Mechanism, an instrument of the African Union Member States, has faulted the decision of the international credit rating agency, Fitch Ratings, to downgrade the African Export-Import Bank from ‘BBB’ to ‘BBB-’ with a negative outlook.
According to a statement on Sunday, the APRM, which is an instrument for AU member states to voluntarily self-monitor their governance performance and provide support to African countries in the field of credit ratings, said the downgrade was based on flawed loan classification.
The APRM routinely undertakes independent analyses of rating actions and commentaries issued by international credit rating agencies on African sovereigns and multilateral financial institutions.
Fitch justified its decision by citing an increase in credit risk and weak risk management policies, based on its estimate that the bank’s non-performing loans stood at 7.1 per cent higher than the six per cent ‘high risk’ threshold outlined in Fitch’s criteria at end-2024.
This estimate stems from Fitch’s classification of exposures to the sovereign governments of Ghana (2.4 per cent), South Sudan (2.1 per cent) and Zambia (0.2 per cent) as NPLs. Notably, this 7.1 per cent figure is significantly higher than the 2.44 per cent ratio reported by Afreximbank in its disclosures.
APRM, in the statement, expressed concern about what it called Fitch Ratings’ misclassification of Afreximbank’s sovereign exposures to the governments of Ghana, South Sudan and Zambia as NPLs.
The statement read, “This classification raises critical legal, institutional and analytical issues which the APRM strongly contests. The assumption that Ghana, South Sudan and Zambia would default on their loans to Afreximbank is inconsistent with the 1993 Treaty establishing the bank, to which Ghana and Zambia are both founding members, shareholders and signatories. The multilateral treaty signed in 1993 is legally binding on all member countries, imposing specific legal obligations related to the bank’s protection, immunities and financial operations.
“By virtue of this treaty, loans extended by Afreximbank to its member countries are governed by a framework of intergovernmental cooperation and mutual commitment, rather than typical commercial risk principles. It is, therefore, legally incongruent to classify a loan to member countries as non-performing, especially when the borrower states are shareholders in the lender institution, no formal default has occurred and none of the sovereigns have repudiated the obligation.”
It claimed that Fitch’s unilateral treatment of these sovereign exposures as comparable to market-based commercial loans despite their backing by treaty obligations and shareholder equity stakes is flawed.
“Doing so reflects a misunderstanding of the governance architecture of African financial institutions and the nature of intra-African development finance. Fitch has misinterpreted the invitation extended by Ghana, South Sudan and Zambia to Afreximbank to discuss the loan repayments as signalling an intention to default and/or to lift the Preferred Creditor Status.
“The APRM calls upon Fitch Ratings to re-examine its criteria and assumptions in this case and to engage in technical consultations with Afreximbank and other relevant African stakeholders. Objective, transparent and context-intelligent credit assessments are critical to ensuring fair treatment of African institutions in the global financial system. The APRM reaffirms its commitment to promoting accuracy in the credit ratings,” the statement concluded.
One of the positive highlights in the rating commentary was Fitch maintaining its ‘medium’ assessment of the business profile risk for the continental bank, taking into consideration its exposure to a ‘high-risk’ operating environment with weak credit quality, low income per capita and high political risk in the countries of operation.
Still positive, Fitch said that the bank had strong capitalisation, as its assessment took into account the ‘moderate’ usable capital to risk-weighted assets (FRA; 21 per cent) ratio, the ‘strong’ equity to assets and guarantees ratio (E/A; 19 per cent at end-2024) and the ‘excellent’ internal capital generation (ICG).
“Fitch expects the FRA and E/A ratios to be broadly unchanged over the forecast period to end 2027. Our projections assume 10 per cent yoy growth in banking operations and capital injections under the general capital increase approved by Afreximbank’s board of directors in June 2021 (totalling $2.6bn in paid-in capital, of which $2.1bn has been already paid),” the statement read.
Meanwhile, earlier this year, China Chengxin International Credit Rating Co., Ltd assigned an ‘AAA/Stable’ rating to Afreximbank, recognising the bank as a leading multilateral financial institution on the continent.
Afreximbank is the first African multilateral financial institution to receive a AAA rating from CCXI. It has expressed interest in exploring opportunities to tap into the Chinese Panda bond market in 2025 to support and facilitate accelerated trade and investment between China and Africa and to expand its existing funding partnerships.
Oil firms scramble to convert licences as June deadline looms
Nigerian Upstream Petroleum Regulatory Commission
The Nigerian Upstream Petroleum Regulatory Commission says several licensees have formally applied for the conversion of their Petroleum Prospecting Licences to Petroleum Mining Leases.
This, it was learnt, became necessary to prevent the expiration of about 40 PPLs granted in June 2022. The NUPRC made this known in a statement clarifying the position of the licences whose expiration date, according to a document on its website, was said to be June 27, 2025.
In the statement, the Chief Executive of the NUPRC, Gbenga Komolafe, confirmed that the report was obtained from the commission’s website, saying, however, that it “is capable of causing unnecessary panic and confusion within Nigeria’s upstream petroleum industry.”
According to Komolafe, the 40 PPLs were at different stages of exploration, appraisal, and pre-development, saying their applications were under review. He stated that each stage had different regulatory requirements and timelines.
“The commission clarified that the 40 Petroleum Prospecting Licences referenced in the publication are at different stages of exploration, appraisal and pre-development. Each stage has distinct regulatory requirements and timelines.
“Several licensees have formally applied to convert their PPLs into Petroleum Mining Leases, as required by the Petroleum Industry Act 2021. These applications are currently under review,” he noted.
The statement explained that many of the operators have already fulfilled their minimum work programme obligations under Section 78 of the PIA, qualifying them for extensions.
It was emphasised that production commencement was not the sole measure of compliance. “The commission firmly asserts its commitment to maintaining an open dialogue while upholding a strong and transparent regulatory regime that benefits all Nigerians,” the statement said.
The PUNCH reports that a document by the NUPRC showed that about 40 oil licences would expire this month, except the necessary steps are taken to prevent it.
According to the Nigerian Upstream Petroleum Regulatory Commission’s Upstream Concession Situation Report in May, the licences, which were granted to different companies on June 28, 2022, would expire on June 27, 2025.
They include the petroleum prospecting licences granted to oil companies after the completion of the 2020 marginal fields bid round. The NUPRC earlier told our correspondent that the law provided for an optional extension of three or five years; however, the extension would depend on the company’s performance.
It was shown from the NUPRC data that the licence to operate the Emohua field of OML 22 by EOP Energy will expire this month. EOP Energy comprises Erebina Energy Resources Limited, Omega-Butter Marginal Fields Ltd, and Intessa Energy Ltd. In the same vein, Ardova Plc and Petrodev’s approval to operate the Olua field of OML 25 through Ardogreen Energy will expire at the same time.
Ingentia Energies Limited, made up of Suntrust Oil Company, Petrogas Energy, and Sonora GTP Ltd, may lose the Egbolom field of OML 23 without renewal. Unless renewed, Matrix Energy and Bono Energy Limited’s Atambia E&P will cease to be the operators of the Alamba field of OML 42, while Energia and Annajul Rosari will lose the Irigbo field in the same OML 42.
ENEROG Limited, comprising Energia and Sterov Consortium, may also lose its licence to produce oil from the Ugbo field of OML 40. It was reported that A. A. Rano and Acrete Petroleum’s licence to operate the Oloye field of OML 95 was also affected.
Similarly, Odu’a Investment Company and Pioneer Global Resource & Integrated Energy Ltd may cease to be the operators of the Bita oil field under OML 95 without the approval of the minister. Transit Oil’s Kudo field in OML 89 will also expire in June.
It was also gathered that Deep Offshore Integrated and Virgin Forest E&P’s licence to run the Bime field in OML 49 is included. Platform Petroleum, Shepherdhill, and Nord Oil’s SHN Energy Ltd are currently the operators of the Kurl field in OML 49, but the licence expires soon.
Our correspondent reports that the licence issued to Northwest Petroleum, Genesis Technical, and Gab & Nutella to operate the Ede field of OML 67 under Ede E&P Ltd is also affected. Duport’s Ekpat field in OML 67 is also involved, as well as Oceangate Engineering Oil’s Udara field in OML 70.
Nkuku field of OML 70, being operated by NIPCO E&P, Aries Petroco Resources, Vhelberg E&P, Pathway Universal Investment, Grende Oil, and AMG, is also affected.
According to the document sourced from the NUPRC website, it was stated in accordance with the PIA and other regulations that an application shall be made to the commission for renewal of an oil mining lease or conversion under certain regulations.
The NUPRC told our correspondent that the law provides for an optional extension of three or five years, depending on the terrain. However, the extension will depend on the company’s performance.
It was stated that the renewal or otherwise depends on the result of an ongoing engagement with these companies. An energy expert, Professor Emeritus Wumi Iledare, said the renewal of the licences is only likely if meaningful exploration or development activities have been undertaken.
According to Iledare, where such activities are absent, renewal becomes increasingly unlikely. After scrutiny of the NUPRC data, Iledare said the licenses are primarily Petroleum Prospecting Licenses governed by the stipulations of the Petroleum Industry Act. He stated that each licence comes with a predetermined expiration or relinquishment date.
Meanwhile, the Federal Government had made known its determination to revoke all dormant oil assets. Worried by the country’s dwindling oil revenue, the Minister of State for Petroleum Resources (Oil), Heineken Lokpobiri, said the ‘drill or drop’ policy would be implemented, saying the government would take over all idle oil wells from operators holding on to them.
The minister disclosed that out of about 60 companies that got approvals in the last marginal bid round, only a few had started production, saying he would not hesitate to cancel unused licences.
“I don’t need to know you to renew or sign your licence, and I will also not look at your face to cancel it. Out of those who benefited from the last marginal bid round, out of about 60, maybe only about three or four or five have started producing.
“Their licences will expire soon because it is for three years, and renewable for another three years. But the condition is that you have a work plan. If you don’t follow your work plan, I also have the discretion to cancel it. If somebody has the marginal oil licence and doesn’t have the capacity to raise funding, you’re just impoverishing him,” he mentioned.
Green Energy completes first crude export from new terminal
Green Energy International Limited
Green Energy International Limited has concluded the first crude oil export from its newly constructed Otakikpo onshore terminal, marking a major milestone in Nigeria’s oil and gas industry.
The company said the export was completed at about 2 pm on Sunday, June 8, when an off-taker vessel chartered by Shell lifted the maiden crude cargo from the terminal, located in the Otakikpo marginal field, Rivers State.
The terminal is Nigeria’s first privately built and operated onshore crude export facility in over five decades.
Chairman of GEIL, Prof Anthony Adegbulugbe, in a statement issued on Sunday, described the development as a historic feat, crediting the success to divine grace, the resilience of the company’s staff, and the support of regulatory agencies.
“We appreciate the efforts of all our partners and the dedication of our indigenous technical team, who worked tirelessly to deliver this project. This is a proud moment for Nigeria and for African-owned energy ventures,” he said.
The PUNCH had earlier reported that the terminal has an initial storage capacity of 750,000 barrels, with potential expansion to three million barrels. It also features a 360,000 barrels-per-day pumping capacity for loading export tankers.
According to Adegbulugbe, the project was completed in under two years and stands as the first crude terminal developed by an African private operator.
He said GEIL had invested over $400m in the initial phase of the project, with full development expected to exceed $1.3bn.
The terminal is designed to accommodate up to 250,000 barrels per day of crude injection, while the Otakikpo field currently produces around 10,000 barrels per day.
The company said the facility also provides strategic evacuation options for over 40 nearby stranded oil fields estimated to hold more than three billion barrels of oil equivalent.
Energy analysts say the terminal could help boost Nigeria’s crude output, reduce reliance on offshore terminals, and attract fresh investments into the country’s oil sector.
With rising global demand for African crude, the terminal is poised to attract more investors and strengthen Nigeria’s position in the international energy arena.
GEIL said the Otakikpo terminal would play a key role in improving oil evacuation and supporting production growth in line with Nigeria’s long-term energy goals.
