The Federal Government’s delay in making payment of the over $500 million cost of operations of joint venture partners for the 2016 fiscal year is unsettling the partners, as the execution of their work programmes are being slowed down on account of shortage of funds to run their businesses.
Some of the companies which had hinged their hopes on government’s promise to pay the 2016 cash call, are now stranded and expressing disappointment.
“We have lost confidence in the government, since she is foot dragging in the payment of this cash call, even after a supposedly firm promise”, a source said.
“We are now struggling to source for funds to meet our operational cost”, another industry source told BusinessDay.
Government had while negotiating to settle the $5 billion cash call arrears it owes for the joint venture operations, agreed to pay $1 billion to net off the cash call for 2016 operations.
Joint venture companies which are managed by indigenous operators are mostly affected by this government failure. The companies include Aiteo, MidWestern Oil&Gas and Eroton Consortium, which acquired 45 per cent of the assets divested by Shell,Total and Eni.
The companies which expressed delight in the coming on-stream of the Forcados pipeline, said the failure of government to pay them their share of the cash call may deny them the opportunity of taking full advantage of this new development , to the benefit of the economy.
In April this year ,the government had paid about $400million out of the $1 billion and promised to pay the shortfall, over $500million in good time.
But the Nigerian National Petroleum Corporation ( NNPC) while responding to enquiries from BusinessDay on the matter said the payment would soon be made to those concern.
Bello Babura Rabiu, chief Operating Officer Upstream, in the NNPC) while responding to a text from BusinessDay on the issue simply said: “very soon by God’s grace they would be paid”.
Bello Rabiu had disclosed to BusinessDay at the Offshore Technology Conference (OTC) in Houston, Texas, United States of America, in May, that since the government has now paid the international oil companies, the next set of investors to be paid would be those that bought the divested assets. He said arrangements were in top gear to resolve with them soon.
According to Rabiu, the government is owing these investors about $500million, which is just for their operational activities for 2016 . He added that the amount is part of the $1 billion that the oil companies demanded that the Federal Government should pay, to show seriousness in the new deal, as regards financing the joint venture operations.
According to him, of the $1billion that was pledged to be redeemed by the government it was $400million that was owed the IOCs, while the remaining $600million belongs to other investors.
He said to ensure that the industry comes alive again, certain steps were taken that would bring back the confidence of the international oil companies.
Olusola Bello
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