The Nigerian affiliate of a pan-African oil trader has filed a US$18.6 million lawsuit against Union Bank of Nigeria (UBN).

Petrocam Trading Nigeria accuses the lender of failing to meet letter of credit (L/C) obligations the two parties had agreed in a joint venture agreement.


Petrocam claims the lender has been negligent and is in breach of contract in a suit filed in a Lagos court.

The oil trader says UBN flouted the joint venture agreement entered into by both parties and under which they said they would collaborate in opening L/C confirmation lines for petroleum product imports.

Foreign exchange arrangements

The joint venture held accounts at UBN and the bank was tasked with using naira deposited in those accounts to bid for and purchase foreign exchange to settle L/C obligations.

However, the bank allegedly failed, neglected and refused to perform its duty as an agent between the company and Central Bank of Nigeria and as a bank to secure foreign exchange to settle L/C obligations.

Specifically, the bank failed to obtain foreign currency when the naira-US dollar exchange rate was favourable, forcing Petrocam to obtain foreign currency when the exchange rate was very much less favourable.

Costly exercise

This meant that settling L/C obligations cost Petrocam far more than it would have done if UBN had met its obligations under the joint venture agreement.

Petrocam wants the court to compel the bank to credit its current account with US$18.6 million plus interest on the sum at the rate of 22 per cent per annum from the commencement of the suit to the date of judgement, with US$138,000 in general damages.

This article represents the views of the author and not necessarily those of the ICC or Coastline Solutions.