- FG, Oil Majors Sign $5.1bn JV Settlement Deal
The Federal Government on Thursday signed a deal with Shell, Chevron, Total, Eni and Exxon Mobil to clear unpaid bills worth $5.1bn for oil production joint ventures piled up over many years.
The Minister of State for Petroleum Resources, Dr. Ibe Kachikwu, said in a speech at the signing ceremony that the deal would unlock new investment in the country’s oil and gas sector, adding that the repayment would take place over the coming five years.
He said the oil majors had given the country a discount of $1.7bn, lowering the original amount from $6.8bn.
The agreement will also ensure that future Nigerian payments to production joint ventures with oil majors would be paid in time, according to the minister.
Kachikwu also said that Forcados exports would resume soon, without giving any more precise information. The grade has been under force majeure since February after multiple attacks on the pipelines that carry it to the export terminal.
The exit from joint ventures cash call agreements between the Nigerian National Petroleum Corporation and international oil companies will lead to an increase in the country’s revenue by $2bn annually, the Federal Government has said.
This is coming as Vice President Yemi Osinbajo announced that the elimination of subsidy on petroleum products had removed a monthly financial burden of N15.4bn on the Federal Government.
Osinbajo disclosed this on the occasion of the signing of an agreement for joint venture cash call exit and presentation of the 2016 petroleum sector scorecard by the Federal Ministry of Petroleum Resources in Abuja on Thursday.
“The downstream oil sector has been deregulated through the elimination of petroleum subsidy, among others. The elimination of petroleum subsidy has removed from the government a burden of not less than N15.4bn monthly,” the Vice President, who was represented by the Attorney General of the Federation and Minister of Justice, Abubakar Malami, said.
On the significance of the cash call exit, the Petroleum Resources ministry, in a document made available to our correspondent in Abuja, stated that the move would restructure the financing template for oil earnings, increase investments and boost government revenues.
It said the agreement would bring clarity and stability to the management of the country’s main revenue source, adding that the exit had already received the approval of the Federal Executive Council.
The ministry explained that the exit was part of new measures and strategies aimed at eliminating the burden of joint venture cash call arrears and securing future funding for the upstream petroleum sector.
It said, “These strategies, which are fully supported by the National Economic Council, will lead to an increase in national production from the current 2.2 million barrels per day to 2.5mbpd by 2019, as well as reduction in unit technical costs from $27.96/barrel oil equivalent to $18/boe.
“The net payments to the Federation Account is expected to double from about $7bn to over $14bn by 2020, and the immediate effect of the new cash call policy will increase net Federal Government of Nigeria revenue per annum by about $2bn.”
Kachikwu pledged that the ministry would continue to drive innovation and change in its approach to delivering an oil and gas industry that would be internationally competitive and governed by open and transparent processes to ensure security of investment for both domestic and international investors.
Egypt Leads Nigeria, South Africa in Foreign Direct Investment
The United Nations Trade Association has Nigeria recorded a total of $2.6 billion in Foreign Direct Investment (FDI) in 2020, below the $3.3 billion posted in the preceeding year.
South Africa, Africa’s most industrialised nation, reported $2.5 billion during the same year, slightly below Africa’s largest economy and 50 percent below the $4.6 billion attracted a year earlier.
The report also noted that Africa recorded a total of $38 billion FDI in the same year, representing a 18 percent decline from the $46 billion posted in the corresponding year of 2019.
However, Egypt led Nigeria and South Africa with $5.5 billion FDI, an increase of 38 percent from the preceeding year.
The report read in part, “FDI flows to Africa declined by 18% to an estimated $38 billion, from $46 billion in 2019. Greenfield project announcements, an indication of future FDI trends, fell 63% to $28 billion, from $77 billion in 2019. The pandemic’s negative impact on FDI was amplified by low prices of and low demand for commodities.”
UNCTAD also noted that global foreign direct investment declined by 42 percent to an estimated $859 billion, down from $1.5 trillion in 2019.
“The decline was concentrated in developed countries, where FDI flows fell by 69 percent to an estimated $229 billion. Flows to Europe dried up completely to -4 billion (including large negative flows in several countries). A sharp decrease was also recorded in the United States (-49%) to $134 billion.”
FG to Partly Fund Six Rail Projects Connecting All Regions
The Federal Government will pay a total sum of N71 billion to partly fund six rail projects connecting all regions of the country.
In the report obtained from the Federal Ministry of Finance, Budget and National Planning, the six rail projects marked for development this year are Lagos-Kano rail line (ongoing), Calabar-Lagos (ongoing), and Ajaokuta-Itakpe-Aladja (Warri).
Others are the Port Harcourt-Maiduguri railway, the new Kano-Katsina-Jibiya-Maradi line in Niger Republic and the Abuja-Itakpe and Aladja-Warri Port and refinery/Warri new harbour.
The Buhari administration will also spend N15.1 billion on the development of safety and security of critical projects, airport certification, runway construction, terminal building, among others in the aviation sector in 2021.
Last week, Rotimi Amaechi, Minister of Transportation, said the Lagos-Kano line would be connected from the Ibadan end of the Lagos-Ibadan railway and would cost $5.3 billion.
“We are waiting for the Chinese government and bank to approve the $5.3bn to construct the Ibadan-Kano. What was approved a year ago was the contract,” the minister said.
He added, “The moment I announced that the Federal Government had awarded a contract of $5.3bn to CCECC (China Civil Engineering and Construction Corporation) to construct Ibadan-Kano, people assumed the money had come in; no.
“We have not got the money, which is a year after we applied for the loan. We have almost finished the one of Lagos-Ibadan. If we don’t get the loan now, we can’t commence.”
FG Launches E-ticketing Platform to Deepen Train Usage and Convenience
In a bid to improve the usage and enhance the convenience of train transport in Nigeria, the Federal Government on Thursday announced the launching of the Electronic Ticketing platform for the Kaduna-Abuja rail services.
The N900 million E-ticketing platform was introduced by the Minister of Transportation, Chibuike R. Amaechi, and the Nigerian Railway Corporation.
Amaechi said the new platform would improve efficiency, promote accountability, reduce leakage and enhance economic growth, as well as save time.
The E-ticketing platform was a Public-Private Partnership project done in conjunction with Secure ID Solutions, who provide and would manage the system for 10 years in an effort to recoup its investment before the Nigerian Railway Corporation take charge.
Kofo Akinkugbe, the Chief Executive Officer, Secure ID Solutions, said as the new E-platform issued 25,000 tickets after a successful pilot test on Thursday.
Potential Travelers can book via three ways:
1. Mobile app
3. POS or Cash at the station
A validator would be used to scan the ticket barcode to ascertain its authenticity before boarding.
Amaechi further announced that self-service ticket vending machines at various train stations would be introduced soon.
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