The Nigerian National Petroleum Corporation, NNPC, cash call underfunding has hit $2.5 billion,Group Managing Director of the corporation, Dr Maikanti Baru, revealed.
The NNPC GMD, who spoke at the 34th Annual International Conference of the Nigerian Association of Petroleum Exploration (NAPE) with the theme “Nigerian oil and gas industry; tackling our realities’’ in Lagos, said that the joint ventures would relieve the government of the cash call burden by sourcing for their operational funds estimated at 7-9 billion dollars annually.
Baru said this is aside the inherited arrears estimated at six billion dollars. To tackle the challenges, he said, the Minister of State for Petroleum Resources, Dr. Ibe Kachikwu and himself “are working assiduously with our Joint Venture partners to see that we exit the JV cash call system and also clear our funding arrears.
He said: “To address this structural funding problem which is further compounded by the security challenges in Niger Delta, we are exploring alternative funding mechanism that allows the Joint Venture Business finance itself by retaining its operating costs and capital allowances (fiscal costs) in order to sustain and grow the business. ”
“Where the fiscal costs for any year are not sufficient to fund the budgetary requirements of the Joint Venture, part of the profit margin could be retained to fund the budget and where necessary, external financing could also be sought to finance commercially viable and bankable capital projects without recourse to government treasury.”
Baru said that it was difficult to deliver the volumes without adequate funding and with an average JV cash call requirement of about 600 million dollar a month coupled with flat low budget levels over the past years.
