The Nigerian National Petroleum Corporation (NNPC) and the African Export-Import Bank (Afreximbank) have agreed to a five-year oil trade finance contract worth $1.04 billion for crude oil exploration and export. This includes a Pre-Export/Shipment Finance Facility backed by a Forward Sale Agreement (FSA) and Offtake Contracts, with the NNPC serving as borrower and seller. Proceeds are expected to improve tax revenues as well as foreign currency receipts of $2.4 billion.

The NNPC is to enter into an FSA in which it will deliver 35,000 barrels of crude oil per day, allowing it to complete its repayment process to the bank, similar to previous arrangements with some of its other joint venture companies, in which the NNPC nets its cash call debt obligations using crude oil.

According to a statement by Afreximbank the facility will, “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 President of the Bank and Chairman of the Board of Directors, Prof. Benedict Oramah, termed the agreement as “balanced” in terms of global climate change goals as the financing agreement complies with Afreximbank’s commitment to promoting local content within Africa’s oil and gas industries to generate foreign receivables into the continent.

“Stopping development for parts of Africa today to achieve a clean environment for the whole world tomorrow is utterly foolhardy,” Oramah stated. “They [Africans] should thus not bear the brunt of the punishment for the mistakes of others,” he added.