Nigerian National Petroleum Corporation, NNPC, debt overhang in cash calls to multinational and local oil companies it operates Joint Venture (JV) project with, has surged to about $7billion.
Cash calls is the counterpart funding the state-run oil corporation pays annually for the 60 per cent equity shareholding it owns in various oil and gas fields operated by International Oil Companies, IOCs, and indigenous oil firms.
As at January 2016, NNPC owed the IOCs cash call arrears of $5.5 billion, while their indigenous counterparts are being owed $1.1 billion, and an estimated $400 million that would have accrued between January and now, it was learnt.
The Federal Government said it is considering the adoption of zero funding model for the JV operations from next year to halt the growth of the cash call arrears but there are still concerns about the model.
The zero JV funding seeks to empower the operators not to wait for the NNPC counterpart funding before going on with operations and projects implementation.
Therefore, the operators will source funds and proceed with projects’ implementations, while the NNPC’s bureaucratic processes of approval including endorsement by the National Assembly continue.
The operators of the JVs will deduct costs at the end and remit what is due to NNPC at the end of the deal.
