The Nigerian National Petroleum Corporation (NNPC) and International Oil Companies (IOCs) Thursday signed an agreement to end the Joint Venture Cash Call arrangement.
The event which was held at NNPC Towers Abuja will usher in an era in which the NNPC will adopt a more sustainable funding arrangement with IoC Joint Venture operations.
Early in November at the 34th Annual International Conference of the Nigerian Association of Petroleum Exploration (NAPE), the Group Managing Director of the NNPC, Maikanti Baru, disclosed that the corporation’s under-funding cash calls was to the tone of $2.5 billion.
Speaking further, Baru disclosed that “the Joint Venture (JV) cash call exit model we are pursuing guarantee government most of the revenue that normally accrues to it from the joint venture operations by lifting the royalty and tax oil upfront. This contributes 75 per cent to 85 per cent of the accruable revenues to government. Consequently, the effect on government take will be minimised. We are working assiduously to kick start this from 1st January, 2017.”
Baru hinted that the joint ventures would relieve government of the cash call burden by sourcing for its operational funds estimated at 7-9 billion dollars annually during his presentation at the NAPE conference.
Thursday’s event will fully discharge the NNPC and the Federal government from all accumulated cash call arrears up to Dec 2015 after repayment of agreed settlement, the twitter handle of the NNPC disclosed at 12pm on Thursday.
According to the NNPC, “the arrears, payable within 5 years, will specifically be through incremental production revenues without impacting the established base production revenue.”
Under the new funding model, FG will continue to receive royalties, Taxes and profit from its equity share of JV operation.
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