The International Islamic Trade Finance Corporation (ITFC), a member of the Islamic Development Bank (IDB) Group, has signed a US$60mn murabaha agreement with the government of Burkina Faso and the country’s national oil and gas company Société Nationale Burkinabè des Hydraucarbures (Sonabhy) for the import of petroleum products.
This new financing will help Sonabhy cover a bigger portion of its petroleum imports. “This co-operation in supporting the energy sector significantly impacts the economy of the country, imported petroleum products being a substantial source of power for the country and therefore vital for its economic development. This will allow Sonabhy to keep ensuring regular supply of hydrocarbons to the country, in these times of cashflow constraints,” says Sonabhy managing director Gambetta Aboubakar Nacro.
Commenting on the signing, Hani Salem Sonbol, acting CEO of ITFC, says: “This new operation is seeking to consolidate ITFC’s financing package and offer financing for the energy sector, leveraging on ITFC’s ability to mobilise resources from the market.”
ITFC and IDB’s relationship with Sonabhy dates back to 2013, when they signed their first trade finance operation of US$30mn.
Murabaha is an islamic trade finance instrument referring to a sale where the seller discloses the cost of the commodity and amount of profit charged. According to the mechanism of murabaha, the bank purchases the commodity as per requisition of the client and sells it on a cost-plus-profit basis.