The Federal Government is to pay about $500million to the next batch of Cash call arrears beneficiaries which are indigenous oil operators that acquired 45 per cent stakes in divested oil assets in order to finally put an end to the issue of call arrears for the year 2016.
According to Bello Babura Rabiu who is the chief Operating Officer Upstream in the Nigerian National Petroleum Corporation (NNPC) who spoke to BusinessDay at a forum organized by the Petroleum Technology Association of Nigeria (PETAN) at the ongoing Offshore Technology Conference (OTC) holding in Houston, Texas, United States of America, he said since the government has now settled the international oil companies, the next set of investors to be settled are those that bought the divested assets. He said arrangements are at top gear to settle them soon.
The next beneficiaries of the cash call arrears payment are companies like Aiteo, Seplat, Eroton consortium which acquired 45 per cent of the assets divested by Shell,Total and Eni.
He said what the government is owing these investors about $500million which is just for their operational activities for 2016 , adding 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.
He said:“We did a few things, when we came in last year there was over $7 billion cash arrears. The country has not being paying it cash call obligations as far back as 2000 but because of the confidence the international oil companies have in the country they continue to borrow us the money to support their operations. But by last year there were challenges in the oil industry and they could not continue to support the government”.
“We had to sit down with the companies, negotiated and agreed to pay them off the total money of about $5 billion cash arrears in five years through on incremental production of crude oil
Secondly , we asked the government for assistance that will take care of cash call problems and in doing this we have actually installed a cash call system which does not require posting cash calls just like we were doing before. So we are now is a situation that in 2016 there was not cash call arrears by the time we would have paid the indigenous companies”
He said it is not only this, there is now a system where any company that has to produce oil and gas would be paid as at when due.
The Minister of State for Petroleum Resources, Ibe Kachikwu, has disclosed on Monday at different for a for investors in Houston that the Federal Government has begun to redeem its pledge to settle outstanding joint venture cash call debts it owes International Oil Companies (IOCs) with $400 million paid last week to them.
Kachikwu told reporters at an investors for organised by the Nigerian Content Development and Monitoring Board (NCDMB) in Houston that the $400 million payment was part of a $1.2 billion cash call debt owed the investors in 2016. This, he stated, was different from the discounted $5.1 billion cash call arrears it negotiated in December 2016 with the IOCs.
The IOCs involved in this are ExxonMobil, Shell, Nigeria Agip Oil Company (NAOC), Chevron, and Total.
The minister noted that a monthly repayment plan of $70 million has also been worked out with the Central Bank of Nigeria (CBN) to offset the $1.2 billion debt in one year.
The minister explained that on the basis of the payment, the IOCs were beginning to regain their confidence in Nigeria’s oil industry, adding that the country’s oil production could increase by 700,000 barrels per day (bd) by 2018 from the development.
Olusola Bello
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