By Abdullahi M. Gulloma
Abuja
The National Economic Council (NEC) has endorsed a new funding regime for the oil and gas industry, eliminating the JV cash calls regime which has stalled the growth of the industry.
in about a decade.
Minister of State for Petroleum, Dr. Ibe Kachikwu, who disclosed this in a presentation to the Council, said the federal government targets $15 billion investments in the plan to end the cash calls.
The minister put the current cash call arrears in the oil sector at about $6.8 billion, adding that in 2016, government had accumulated unpaid cash call arrears of over $2.5 billion.
He said figures were accumulated due to failure to pay the joint cash calls when oil was selling between $110 and $120 per barrel.
He said it is currently difficult for the government to pay the debts because of militancy and the drop in oil prices from $110 to $40.
“There really wasn’t any justification why these monies shouldn’t have been paid in terms of the five years arrears. We have been able to find that solution. What we have been able to put together has enabled us to have over $1.7 billion savings for the government on the $6.8 billion that was previously owed. So we are going to be owing only $5.1 billion as oppose to $6.8 billion dollars.
“We are trying to cover that through three thresholds: one is to continue to do an accelerated cash call payments between October and December. Hopefully, that will bring the figure down to about $1.5 billion, and that $1.5 billion was sinking resources from FG either through some of our reserve or Nigeria LNG or a combination of that and alternative funding to try and train staff that should be completed hopefully by December.
“Beginning next year, if this goes into place the issue of cash call era would have disappeared . The effect of what this is that investments in excess close to $15 billion are likely to be announced by the oil companies bringing back most of the projects within couple of weeks once this is signed.
“For the first time the oil industry will take responsibility for arranging their own funding and being able to produce oil and save the federal government the whole nightmare of cash calls every year. So, this is a very dramatic move in the oil industry. We are still going to make presentation to the National Assembly for them to understand this,” he said.
