NNPC seals $1bn deal with Afrieximbank to boost oil output

The African Export-Import Bank (Afreximbank) has signed a $1.04 billion deal with the Nigerian National Petroleum Corporation (NNPC) to boost oil output. 

The deal was signed at the ongoing Intra-African Trade Fair (IATF) in Durban, South Africa.

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.

Through the FSA, NNPC will deliver 35,000 barrels of crude oil per day. 

The proceeds of the facility, according to NNPC, 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. 

Umor Ajia, NNPC executive director and group chief executive officer, who signed the contract, said 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, Benedict Oramah, president of Afrieximbank, 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.

Oramah said that Africa is more of a victim than a perpetrator in the emission of destructive greenhouse gases, contributing only a meagre 4 percent. 

He added that 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,” Oramah said. 

The Intra-African Trade Fair (IATF) 2021 is a 7-day pan African, cross-sector trade fair aimed at sharing trade, investment and market information of African countries to buyers, sellers, investors and the global trade market.