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At South Africa fair, Afreximbank seals $1.04b exploration deal with NNPC

By Helen Oji, Durban
18 November 2021   |   3:01 am
African Export-Import Bank (Afreximbank) has signed a $1.04 billion facility with the Nigerian National Petroleum Company Limited (NNPC) to finance oil exploration.

NNPC

African Export-Import Bank (Afreximbank) has signed a $1.04 billion facility with the Nigerian National Petroleum Company Limited (NNPC) to finance oil exploration. 
 
The agreement was concluded yesterday in Durban during the second Intra-Africa Trade Fair (IATF), which opened on November 15 and runs till November 21.  
 


The transaction comprises a pre-export/shipment finance facility underpinned by a Forward Sale Agreement (FSA) and off-take contracts, with the NNPC acting as the borrower and seller.

With the arrangement, NNPC is to enter an FSA for it to deliver 35,000 barrels of crude oil per day.  
 
According to the bank, the proceeds will boost tax revenues and foreign currency receipts, as well as 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.

Consequently, this is to improve the balance of trade and Gross Domestic Product in Nigeria, Africa’s largest economy.    

Signed by NNPC Executive Director and Group Chief Executive Officer, Umor Ajia, on behalf of the corporation, the transaction “is in line 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, placed the bank’s decision in the context of the world’s climate change agenda, saying, “this is a case of adopting a balanced approach.” 

Oramah asserted that Africa “is more of a victim than a perpetrator in the emission of destructive greenhouse gases, contributing only a meagre four per cent, 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.”

The don added: “Stopping development for parts of Africa today to achieve a clean environment for the whole world.”