Multilateral financial institution the African Export-Import Bank (Afreximbank) has signed a $1.04-billion facility with the Nigerian National Petroleum Corporation (NNPC) to finance the exploration of petroleum.
The transaction comprises a pre-export/shipment finance facility underpinned by a forward sale agreement (FSA) and offtake contracts from the NNPC acting as the borrower and seller.
"NNPC will enter an FSA within which it shall deliver 35 000 bbl/d of crude oil. The proceeds of the facility will boost tax revenues and foreign currency receipts and create thousands of jobs in the oil and gas refining value chain, all by more than $2.4-billion to the immediate benefit of the government, thereby improving the balance of trade and gross domestic product in Africa’s largest economy Nigeria," Afreximbank said in a statement.
The agreement was concluded on November 16, in Durban, during the second Intra-African Trade Fair.
The transaction complies with Afreximbank’s mandate to promote local content in Africa’s oil and gas and other mining industry and generate foreign receivables into Africa, said NNPC Group CEO and executive director Umor Ajia.
Afreximbank president and board of directors chairperson Professor Benedict Oramah said the bank’s decision in the context of the world’s climate change agenda is a case of adopting a balanced approach.
“Africa is more of a victim than a perpetrator in the emission of greenhouse gases, contributing only 4%. The majority of the continent, ironically, has been left behind development wise and has to depend on fossil fuel for survival, and should thus not bear the brunt of the punishment for the mistakes of others. Stopping development for parts of Africa today to achieve a clean environment for the whole world tomorrow is utterly foolhardy,” he said.