The Federal Government has paid $3.81 billion in cash call arrears to foreign oil corporations through joint ventures. This was done through the Nigerian National Petroleum Company Limited.
According to figures reviewed in Abuja on Thursday, the $3.81 billion repayment has been completed as of May 31, 2022, leaving an outstanding amount of $873.34 million. The government and the five IOCs agreed to a total debt of $4.68 billion.
In light of projected future capital, operational expenses, or the need for further capital contributions, joint venture operators will send cash calls to non-operating partners for payment. The Federal Government was required to pay unpaid cash calls to the IOCs that it had contracted with through the NNPC over the years.
Shell Petroleum Development Company, Mobil Producing Nigeria, Chevron Nigeria Limited, Total Exploration and Production Nigeria, and Nigeria Agip Oil Company are the government’s joint venture partners in this arrangement.
According to the report on the most recent cash call arrears payback that was acquired from NNPC, the government had settled the whole negotiated debts for Mobil and Chevron, which were $833.75 million and $1.09 billion, respectively.
The total negotiated debts for SPDC, TEPNG, and NAOC were estimated to be $1.37 billion, $610.97 million, and $774.66 million, respectively. As of May 31, 2022, the total payments made to the three IOCs were $777.4 million, $545.86 million, and $561.53 million, leaving unpaid balances of $595.1 million, $65.11 million, and $213.13 million, respectively.
The report showed that the total negotiated debt for all five IOCs was $4.68bn. The total payment to date as of the period of review was $3.81bn, while the outstanding balance was $873.34m.
Experts encouraged the government to continue in the repayments of its cash call debts to the five IOCs, noting that the delay in settling the debts had contributed to slowing oil sector investments in Nigeria.
“You cannot owe me billions or millions of dollars and still want me to invest additional billions or millions in your country when I’m not sure of getting the money you owe,” a former President, of the Association of National Accountants of Nigeria, Dr Sam Nzekwe, said in his reaction to the development.
He, however, lauded the government for striving to clear the cash call arrears, adding that “this would mean well for the oil sector and would encourage investors to invest in the industry, though the sector has its challenges at the moment.”
The Chief Executive Officer, of Centre for the Promotion of Private Enterprise, Dr Muda Yusuf, earlier explained that the delay in cash call repayments had been a drag on the growth of Nigeria’s oil sector.