African Export-Import Bank (Afreximbank) has signed a $US1.04 billion facility with the Nigerian National Petroleum Corporation (NNPC) to finance the exploration of petroleum. The agreement was concluded yesterday in Durban during the second intra-Africa trade fair, which opened on 15 November and runs until 21 November.

The transaction comprises a Pre-Export/Shipment Finance Facility underpinned by a Forward Sale Agreement (FSA) and Offtake Contracts from the Nigerian National Petroleum Corporation acting as the Borrower and Seller.

NNPC will enter an FSA within which it shall deliver 35,000 barrels of crude oil per day. 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 US$2.4bn to the immediate benefit of the government thereby improving the balance of trade and Gross Domestic Product in Nigeria – Africa’s largest economy.

Signed by Mr. Umor Ajia, NNPC Executive Director and Group Chief Executive Officer on behalf of NNPC, the transaction complies with Afreximank’s mandate to promote local content in Africa’s Oil and Gas and other mining industry and generate foreign receivables into Africa.

While lauding the deal as very innovative, Afreximbank President and Chairman of the Board of Directors Prof. Benedict Oramah explained the Bank’s decision in the context of the world’s climate change agenda, saying this is a case of adopting a balanced approach.

Prof. Oramah added that Africa is more of a victim than a perpetrator in the emission of destructive greenhouse gases, contributing only a meagre 4%, while a majority of the Continent, ironically having been left behind development wise, still 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,” quipped Prof. Oramah.