- FG Saves $1.7bn on Cash Call Payment to IOCs
The Minister of State for Petroleum Resources, Dr. Ibe Kachikwu, on Thursday said a solution put in place by his ministry and the Nigerian National Petroleum Corporation to find a sustainable solution to the funding of Joint Venture cash call obligations of the Federal Government had led to savings of $1.7bn.
Kachikwu said this in a chat with State House correspondents after making a presentation to the National Economic Council in which he sought endorsement for a proposal approved by the Federal Executive Council to change the funding configuration of Joint Ventures for upstream companies.
With the solution, he said government had been able to save over $1.7bn on the $6.8bn that was previously owed.
While adding that the government owed only $5.1bn as opposed to $6.8bn, the minister said $5.1bn would be paid within five years interest-free.
According to him, the cash call arrangement in the oil sector will end completely by next year.
He recalled that the cash call arrears in the oil sector over five years up until December 2015 was about $6.8bn, while the arrears for this year was put at $2.5bn.
While stating that there was no justification for the previous arrears at a time when global oil prices were at the peak, the minister attributed the arrears of 2016 to the effect of militancy and the drop in oil prices from $110 to $40 per barrel.
He said the barrels of oil to pay for this would come from the incremental generation by the oil companies and not on the current 2.2 million barrels daily production figure for the country.
The minister said, “Beginning next year, if this goes into place, the issue of cash call era would have disappeared. The effect of this is that investments in excess of $15bn are likely to be announced by the oil companies, bringing back most of the projects within couple of weeks. Once this is signed, we are using this as a parameter to save at least $1bn from 2017.
“We will be looking at reducing the cost of barrel per production from the current $27 per barrel, which is one of the highest in the world, to a figure within the threshold of $18 per barrel over the next two years, ultimately to about $15 over the next four years.”
Kachikwu added, “The barrel reserve production should increase to about 2.5 million by 2019 and potentially to about three million by 2021. So, there will dramatic effects. 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.”
Federal Government Clears $120m Debt to Gas Companies Amid Nigeria’s Power Crisis
Amidst Nigeria’s persistent power crisis, the Federal Government has taken a pivotal step forward by clearing a significant portion of its debt to gas companies.
A sum of $120 million has been paid out of the country’s $1.3 billion indebtedness to gas suppliers, offering a glimmer of hope for improved energy stability across the nation.
The Minister of Power, Chief Adebayo Adelabu, underscored the critical role of gas in power generation and highlighted how the mounting debts had severely hampered gas supply to electricity-generating companies, exacerbating the country’s electricity shortfall.
Nigeria heavily relies on thermal power plants fueled by gas for over 70% of its electricity needs, making the timely settlement of gas debts paramount for enhancing power generation capacity and addressing the nation’s energy deficit.
Addressing delegates at the 7th Nigeria International Energy Summit in Abuja, the Director of the Decade of Gas Secretariat, Ed Ubong, expressed optimism about the government’s progress in offsetting its financial obligations to gas producers.
He emphasized the importance of aligning gas and power sectors to foster sustainable energy solutions.
As Nigeria grapples with the multifaceted challenges plaguing its energy landscape, the government’s commitment to settling outstanding gas debts marks a pivotal stride towards revitalizing the country’s power infrastructure and ensuring reliable electricity access for its citizens.
Nigeria Insurance Corporation Reimburses Depositors of 179 Closed Microfinance and Four Mortgage Banks
The Nigeria Insurance Corporation (NDIC) has announced the successful reimbursement of depositors affected by the closure of 179 microfinance banks and four mortgage banks across the country.
The reassuring news came during the 45th Kaduna International Trade Fair, where NDIC’s Managing Director, Dr. Bello Hassan, explained the corporation’s unwavering commitment to safeguarding depositors’ funds amidst financial uncertainties.
Dr. Hassan, represented by Hauwa Gambo, the NDIC’s Deputy Director of Communication, highlighted the corporation’s proactive measures in protecting the interests of depositors.
The introduction of the Single Customer View framework has expedited the process of reimbursing depositors of liquidated banks, ensuring swift and transparent transactions.
The corporation’s collaboration with the judiciary has yielded positive results, facilitating the speedy prosecution of failed insured banks and resolving long-standing cases of bank liquidations like Fortune and Triumph Banks.
This concerted effort has significantly enhanced the debt recovery rate, enabling NDIC to declare full liquidation dividends to uninsured depositors of over 20 deposit money banks.
Furthermore, NDIC has embraced digital remote payment strategies, streamlining electronic funds transfers to verified depositors’ alternate bank accounts.
The introduction of the ‘Deposit Tracer’ initiative in partnership with mobile operators aims to address apathy among depositors with small balances, providing accessible avenues for claiming funds trapped in closed banks.
The initiatives underscore NDIC’s proactive stance in safeguarding depositors’ interests and ensuring financial stability in Nigeria’s banking sector.
85.51 Million Nigerian Bank Customers Face Withdrawal Freeze Over NIN, BVN Deadline
As the March 1 deadline looms, an estimated 85.51 million Nigerian bank customers are facing the possibility of frozen accounts due to their failure to link their National Identification Numbers (NINs) and/or Bank Verification Numbers (BVNs) to their accounts.
Recent findings reveal the potential scale of the impending banking crisis.
Data from the Nigeria Inter-Bank Settlement System (NIBSS) indicates that Nigeria had approximately 146 million active individual bank customers as of December 2022.
However, by January 26, 2024, only 60.49 million BVNs were recorded on the NIBSS portal, leaving a significant portion unlinked.
Meanwhile, about 104 million NINs had been issued by December 2023, highlighting the disparity between NIN issuance and BVN linkage.
The Central Bank of Nigeria (CBN) had earlier issued directives to banks, mandating them to restrict transactions on accounts lacking linked NINs and BVNs, with effect from March 1, 2024.
Any accounts found non-compliant risk being designated as ‘Post no Debit,’ rendering them unable to process further transactions.
Responding to the impending crisis, the Director-General of the National Identification Management Commission (NIMC), Abisoye Coker-Odusote, emphasized the need for the revalidation of Front-End Partners (FEPs) to ensure the integrity of the identity database.
She underscored the importance of NIN registration and urged collaboration with various stakeholders to expedite the process.
The Executive Vice Chairman/CEO of the Nigerian Communications Commission (NCC), Dr. Aminu Maida, reiterated the significance of linking NINs to SIM cards to enhance national security.
Telecom subscribers were urged to comply with the NIN-SIM linkage directive to avoid service disruptions.
Meanwhile, financial service providers like Opay have issued reminders of the impending restrictions, urging customers to comply with the linkage requirements.
Amidst concerns, some customers contemplate transferring funds to compliant accounts to avoid potential financial setbacks.
As the deadline approaches, stakeholders are intensifying efforts to mitigate the impact of the impending banking crisis on millions of Nigerians.
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