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From Uche Usim, Abuja
To boost crude oil production in Nigeria, the African Export-Import Bank (Afreximbank) has signed a $1.04 billion facility with the Nigerian National Petroleum Corporation (NNPC) to finance petroleum exploration in the country.
The agreement was concluded in Durban , South Africa at the ongoing second Intra-Africa Trade Fair, which opened on November 15, and runs until November 21.
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The transaction comprises a pre-export/shipment finance facility underpinned by a Forward Sale Agreement (FSA) and Offtake Contracts with 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 $2.4 billion 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 the Corporation, 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.
