Connect with us

Economy

FG Owes Oil Firms $8.1bn in Cash Calls

Published

on

markets energies crude oil

The Federal Government owes oil companies at least a total of $8.06bn in unpaid cash calls, as the Nigerian National Petroleum Corporation failed to pay $3.06bn in the first seven months of the year.

The nation’s oil and gas production structure is majorly split between Joint Ventures onshore and in shallow water with foreign and local companies and production sharing contracts in deepwater offshore.

The NNPC owns between 55 per cent (for JVs with Shell) and 60 per cent (for all others) and the JVs are jointly funded by the private oil companies and the Federal Government through the corporation.

The latest monthly report of the NNPC showed that the corporation paid a total sum of $1.932bn from January to July this year, as against $4.987bn expected to be paid for the period.

It paid $407,857,571 in January, $236,700,314 in February, $141,868,647 in March and $300,590,276 in April. The corporation paid $149,876,805 in May, $214,398,900 in June and $168,129,620 in July.

In July, N61,615,100,170 (equivalent to a functional dollar of $312,767,005.94 at a budgeted exchange rate of N197/$) was transferred to joint venture cash call from domestic crude oil receipts of N90,815,444,663 in addition to the $168,129,620.

The NNPC is expected to pay $712.46m to its joint venture partners monthly for the development of oil and gas assets, translating into $8.55bn for the year, up from $7.39bn in 2015.

Last year, the corporation recorded a shortfall of $3.3bn in its cash call payment as it was only able to pay $4.13bn to the JV partners.

In January, industry stakeholders including the Managing Director/Chief Executive Officer, Chevron Nigeria Limited, Mr. Clay Neff, said the cash call arrears owed by the NNPC was over $5bn.

The NNPC in the report said, “Total export crude oil and gas receipt for the period of August 2015 — July 2016 stood at $3.21bn. Out of which the sum of $3.16bn was transferred to JV cash call in line with 2015/2016 Approved Budget and the balance of $0.49bn was paid to Federation Account.

“However, this amount falls short of the calendarised appropriated amount of $615.80m and $712.46m for 2015 and 2016 respectively. This is due to worsening production and fall in crude oil price.”

According to the NNPC, the JVCC funding is a first-line priority statutory provision in the 2016 Budget.

“Funding approved JVCC commitments is necessary to protect current and future production and the vice versa is detrimental and unlawful,” it said.

The funding problem, which has lingered for over two decades, has been exacerbated by the steep fall in global oil prices which drove down the country’s earnings from the commodity, its major revenue-earner.

Production from JV assets has over the past few years seen significant decline, partly due to funding constraints occasioned by the NNPC’s inability to meet its share of cash call obligation.

An industry source had in June said as of January this year, about $5.5bn cash call arrears had not been paid to the International Oil Companies, while $1.1bn is owed to the indigenous companies.

The Group Managing Director, NNPC, Dr. Maikanti Baru, on Tuesday said it had started working out modalities that would enable it to exit JV cash call arrears by ensuring that outstanding and future payments were liquated from oil and gas royalties and taxes under a first-line charge model.

The Federal Government must get out of paying so-called cash calls to joint ventures with oil and gas companies to stand a chance of pulling its ailing economy out of recession, the Finance Minister, Kemi Adeosun, said this month.

The minister said the NNPC had spent N110bn ($360 million) on cash calls this month, which dwarfed the country’s N41bn income from oil production over the same period.

“We are already working to see how we can get out of the cash calls. And that is very fundamental to the economy,” Adeosun told a press conference.

“We are working with the Ministry of Petroleum Resources and NNPC … that’s a long-term plan: To allow those joint ventures to borrow money that they need rather than taking money out of the Federation Account.”

CEO/Founder Investors King Ltd, a foreign exchange research analyst, contributing author on New York-based Talk Markets and Investing.com, with over a decade experience in the global financial markets.

Continue Reading
Comments

Economy

Nigeria-South Africa Trade Hits $2.9bn

Published

on

Shipowners

The volume of trade between Nigeria and South Africa hit $2.9 billion last year with expectation of it rising further with the African Continental Free Trade Area (AfCFTA) agreement.

Nigeria’s Consul General, Malik Abdul, in a statement noted that Nigeria accounts for 64 per cent of South Africa’s trade in West Africa and is one of his country’s top three sources of crude oil.

He further added that in 2020, South Africa imported R35 billion ($2.48 billion) worth of goods, predominantly crude oil from Nigeria and exported R6 billion ($425milion) to Nigeria.

He stated: “South Africa is currently among the top 10 per cent of investors in Nigeria, globally and Nigeria is South Africa’s 10th biggest export market in Africa and thirty-second globally. Nigeria accounts for 64 per cent of South Africa’s trade with West Africa and is one of South Africa’s top three sources of crude oil.

“Also, Nigeria in 2020 was South Africa’s top import market in Africa and sixth globally, after China, Germany, USA, India and Saudi Arabia. Over the past year, South Africa imported $2.48 billion worth of goods predominantly crude oil from Nigeria and exported $425 million worth to Nigeria.”

Also, the consulate said his embassy issued a total of 10,341 passports to Nigerian citizens in South Africa between March 2020 and May 2021.

The consul general further said the Mission had 404 unclaimed passports, and advised all those whose passports were processed and pending from August 2020 to come for collection.

Abdul added that the consulate was working to clear all COVID-19 lockdown backlog of applications, urging members of the public to exercise patience while the mission was resolving the backlogs.

On the re-introduction of administrative fees and charges for lost passports, Abdul said that the step was taken to harmonise and standardise consular services following approval from the Ministry of Foreign Affairs, Abuja.

The Mission had increased the fees for lost passports from R1,500 to R2,000, and admin charges of R120 for data capturing.

“On this issue, the Mission could not unilaterally impose any charges without headquarters’ approval or consent.

“The admin fees of R120 pertains to all services rendered by the two Missions,” he said.
According to the Nigerian envoy, the decision was taken to remove disparities in all consular services, noting that visa fees have also been harmonised.

On penalty for lost passports, Abdul disclosed that 484 Nigerian passports were reported missing at the mission between August 2020 and May 2021 with request for re-issue.

Abdul said it was discovered that there were criminal undertones and immigration rules infractions associated with the ‘so-called’ lost passport declarations.

“In line with practice in other Missions, there was a need to impose fines to deter people from engaging in such infractions.

“At such an astronomical rate of loss declarations, the option will be to refer such losses to Nigeria for processing.

“This will save the booklet for genuine requests of re-issue and thereby reducing the backlog and pressure on the Mission,” the envoy said.

Abdul disclosed that the consulate had received a directive to embargo processing of lost passports pending further instructions from the headquarters.

The consul general then accused some Nigerian groups in South Africa of, “peddling lies and outright falsehoods” against the Mission and his person.

“These disgruntled elements have gone ahead to incite fellow Nigerians with intent to sabotage the Mission.

“Moreover, a lie and falsehoods often repeated amounts to a propaganda which can be misinterpreted by the gullible and undiscerning as truth,” he said.

Continue Reading

Economy

NNPC Engages Gas Producers to Improve Power Supply

Published

on

Electricity - Investors King

The Nigerian National Petroleum Corporation (NNPC) has started engaging gas producers across the country in an effort to boost gas supply to power generation companies (Gencos) and subsequently improve electricity supply.

Mr. Yusuf Usman, the Chief Operating Officer, Gas and Power, NNPC, disclosed this in Lagos during his tour of Egbin Power Plc facility on Monday.

Usman, who responded to concerns raised by the Chairman of Egbin Power Plc, Mr. Temitope Shonubi, said the company’s concern on gas supply and transmission restrictions had been noted, adding that the corporation would support it to ensure constant power supply.

I have listened to all the concerns you raised. An area of concern to me is when you talked about the gas constraints. We are going to support you to make sure that the power supply is steady. We are having a session with gas suppliers in this regard.

“I am aware that works are ongoing in this regard to ensure that all the power we generate is safely evacuated,” Usman said.

Usman, however, said he was impressed by the level of progress being recorded by Egbin, noting that the effort of the company’s management to effect turnaround maintenance at the company through overhaul of the entire system, was commendable.

Usman added: “The visit has been an eye opener for me. We have seen turbines that have been running for over 40 years. We have seen efforts being made by Egbin management to effect a turnaround at the plant through overhaul of the entire system.

“We have also seen the support you have been given to the youths through employment and capacity development opportunities.”

Shonubi, in his remarks, said Egbin Power was planning to increase power generation by 1,900 megawatt.

Shonubi said: “Egbin has 1,320MW capacity. As at the time we took over, the plant was generating 300MW which is abysmal 22 per cent. As at today, our generation capacity has surged and we do 89 per cent.

“We have reached the highest peak of 970MW and we are working hard to ensure sustainability of this feat.

“The 970MW we hit is the highest recorded this year and based on our core value of sustainability, we are working round the clock to make sure that we sustain the gains, which we have made.”

Continue Reading

Economy

Nigeria’s Inflation Rate Moderates to 17.93 Percent in May

Published

on

consumer price index - Investors King

Inflation in Africa’s largest economy, Nigeria, moderated from 18.12 percent year-on-year in April to 17.93 percent year-on-year in May, according to the latest report from the National Bureau of Statistics (NBS).

On a monthly basis, headline inflation grew by 1.01 percent in May. Representing an increase of 0.04 percent when compared to 0.97 percent filed in April.

Core inflation, which excludes the prices of volatile agricultural
produce stood at 13.15 percent in May 2021, up by 0.41 percent when compared with 12.74 percent recorded in April 2021.

On month-on-month basis, the core sub-index increased by 1.24 percent in May 2021. This was up by 0.25 percent when compared with 0.99 percent recorded in April 2021.

The highest increases were recorded in prices of Pharmaceutical products, Garments, Shoes and other footwear, Hairdressing salons and personal grooming establishments, Furniture and furnishing, Carpet and other floor covering, Motor cars, Hospital services, Fuels and lubricants for personal transport equipments, Cleaning, repair and hire of clothing, Other services in respect of personal transport equipments, Gas, Household textile and Non durable household goods.

The average 12-month annual rate of change of the index was 11.50 percent for the twelve-month period ending May 2021; this is 0.25 percent points higher than 11.25 percent recorded in April 2021.

Food index rose by 22.28 percent in the month of May 2021, up by 0.06 percent points from 0.99 percent recorded in April 2021.

The average annual rate of change of the Food sub-index for the twelve-month period ending May 2021 over the previous twelve-month average was 19.18 percent, 0.60 percent points from the average annual rate of change recorded in April 2021 (18.58) percent.

Continue Reading




Advertisement
Advertisement
Advertisement

Trending