The African Export-Import Bank (Afreximbank) has signed a $US1.04 billion loan agreement with the Nigerian National Petroleum Corporation (NNPC) to fund petroleum exploration.
The agreement was signed in Durban on Wednesday as part of the second intra-Africa trade fair, which began on November 15 and will end on November 21.
The transaction consists of a Pre-Export/Shipment Finance Facility backed by a Forward Sale Agreement (FSA) and Offtake Contracts from the Nigerian National Petroleum Corporation, which acts as both the borrower and the seller.
The NNPC will sign a forward sales agreement (FSA) under which it will deliver 35,000 barrels of crude oil per day. The facility’s proceeds will increase tax revenues and foreign currency receipts, as well as create thousands of jobs in the oil and gas refining value chain, totaling more than US$2.4 billion for the government’s immediate benefit, improving Nigeria’s balance of trade and GDP.
The transaction, which was signed on behalf of NNPC by Mr. Umor Ajia, Executive Director and Group Chief Executive Officer, complies with Afreximank’s mandate to promote local content in Africa’s oil and gas and other mining industries, as well as generate foreign receivables into Africa.
Prof. Benedict Oramah, President and Chairman of the Board of Directors of Afreximbank, praised the deal as “very innovative” and explained the Bank’s decision in the context of the global climate change agenda, saying it was a case of “adopting a balanced approach.”
Prof. Oramah went on to say that Africa is more of a victim than a perpetrator in terms of greenhouse gas emissions, contributing only 4%, while the majority of the continent, ironically having been left behind in terms of development, still relies on fossil fuel for survival, and thus should not bear the brunt of the punishment for others’ mistakes.
Afreximbank is a Pan-African multilateral financial institution tasked with financing and promoting intra- and extra-African trade.
