The African Export-Import Bank (Afreximbank) has signed a $1.04 billion facility with the Nigerian National Petroleum Corporation (NNPC) to finance the exploration of petroleum.

The agreement was concluded on Tuesday in Durban during the second Intra-Africa Trade Fair (IATF2021), which opened on November 15 and runs until November 21, a statement by the bank said on Wednesday.

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

NNPC would enter an FSA within which it shall deliver 35,000 barrels of crude oil per day.

The proceeds of the facility would 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.

The deal was signed by Mr. Umor Ajia, NNPC’s Executive Director and Group Chief Executive Officer, on behalf of NNPC.

The transaction complies with Afrexibank’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’s President and Chairman of the Board of Directors, Prof. Benedict Oramah, explained the bank’s decision was in the context of the world’s climate change agenda.

“This is a case of adopting a balanced approach.

“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.

“They 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.