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NNPC Suspends Cash Call Payment to Italy’s Eni

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  • NNPC Suspends Cash Call Payment to Italy’s Eni

The Nigerian National Petroleum Corporation (NNPC) has suspended cash call repayments to Italian oil major, Eni, for three months and did not plan to renew some of the firm’s asset licences.

NNPC owes billions of dollars to international oil companies (IOCs), including Eni, its share of operating costs for their joint ventures, better known as cash calls.

The corporation, has however, paid over $2 billion of the debt, which was originally $5 billion.

This is coming as the Supreme Court in London will hear an appeal by Nigerian farmers and fishermen to pursue claims in England against oil major, Shell, over oil spills in the Niger Delta, lawyers for the two affected communities said yesterday.

NNPC’s refusal to pay Eni’s cash calls followed some disputes, which have hindered development of some of the country’s oil assets.

NNPC has also disclosed its unwillingness to ensure the renewal of Eni’s expired licences.

In a statement yesterday by NNPC’s spokesman, Mr. Ndu Ughamadu, the corporation promised to work closely with Agip to speedily resolve all pending issues that led to the suspension of the cash-call repayment.

The Group Managing Director (GMD) of the corporation, Mallam Mele Kyari, made the commitment on Tuesday during a business visit by a delegation from ENi/Agip led by the Executive Vice Chairman, Sub-Saharan African Region and Chairman ENI Exploration and Production in Nigeria, Mr. Brusco Guido.

The statement quoted Kyari as saying that the failure to pay cash call arrears in the last three months was deliberate and meant to ensure that the issues surrounding the agreement settled.

“The money is there, it is ready. We will pay as soon as the issues are resolved by the end of the week,” Kyari stated.

On the issue of some of the expired assets, the GMD said there was no immediate plan to renew the licences as the federal government was interested in having the exploration and production arm of the NNPC, the Nigerian Petroleum Development Company (NPDC), operate them.

On the Okpai Independent Power Project, Kyari said the issues that led to the delay in payment had been resolved and payment would be done as soon as possible.

“We will work with you. You can count on us,” he assured the Agip team, urging them to fast-track the Phase 1 of the rehabilitation of the Port Harcourt Refinery to ensure that it was delivered before the scheduled date of October 2019.

Earlier, Guido had said the company aligned with the GMD’s three-point agenda of growing reserves, growing production, and cutting cost.

He, however, listed some challenges that had hampered its operation and urged the NNPC management to help resolve them in order to meet its target of growing production from the JV assets by 30 per cent over last year’s rate.

Meanwhile, NNPC has restated its commitment to the prompt payment of proceeds from its operations to the Federation Account and steady supply of petroleum products to Nigerians.

Its Chief Financial Officer (CFO), Mr. Umar Ajiya, renewed the commitment at a strategy session in Abuja with heads of Accounts Department of the corporation’s subsidiaries.

Another statement yesterday by Ughamadu stated that the meeting was part of the initiatives to rally the corporation’s business leaders in support of the new management’s agenda.

Ajiya stated that the strategic role of the Accounts Directorate was crucial to the realisation of the new GMD’s goals and objectives, stressing that there was need for all managers of accounts to improve on deliverables.

“This important meeting is to ensure that the management of Finance and Accounts Directorate corporate-wide are properly briefed on the direction of the new NNPC management and work as a team to deliver on the GMD’s commitments to the nation among which are: paying what is attributable to the federation by way of FAAC remittances and meeting up with obligations to all stakeholders as and when due,” he said.

The CFO listed eight key areas where the Accounts Directorate can help in actualising the GMD’s agenda to include: liquidity management; financing for growth; business process improvement, budget and budgetary controls payment system, cost control/discipline, real-time financial reporting, capacity building, autonomy for SBUs, and maintenance of pension funding.

He stated that the GMD’s mandates and commitments had financial implications and the directorate was looking ahead and ready to implement the direct debit and cash sweep mechanism to grow other businesses for a more viable corporation.

Ajiya said under his watch, SBU autonomy would be enhanced but such freedom must be tied to the responsibility of going beyond self-funding to contributing to the general purse.

UK Supreme Court to Hear Nigerians’ Oil Spill Case

In another development, the Supreme Court in London will hear an appeal by Nigerian farmers and fishermen to pursue claims in England against Shell over oil spills in the Niger Delta.

Reuters reported that the decision to hear the appeal re-opens the possibility for British multinationals to be held liable at home for their subsidiaries’ actions abroad.

It comes after a setback in February last year when a London court ruled that the claim could not be pursued in England.

“The decision will allow the two communities from Bille and Ogale in the Niger Delta to appeal to the UK’s highest court, having suffered from decades of pollution from Shell’s pipelines,” Leigh Day, the law firm representing the communities, said in a statement.

The main question for the courts is whether they have jurisdiction over claims against Shell’s Nigerian subsidiary, Shell Petroleum Development Company (SPDC), which is jointly operated with the Nigerian government.

“We maintain that claims by Nigerian communities against a Nigerian company about events in Nigeria, should be heard in Nigeria and not the UK,” said an SPDC spokeswoman.

SPDC added that the spills are chiefly due to oil theft, sabotage and illegal refining.

But the communities maintained that they couldn’t seek redress in Nigerian courts.

“The English courts are our only hope because we cannot get justice in Nigeria,” said King Okpabi, the ruler of the Ogale community, in yesterday’s statement.

Ruling on a similar case in April, London’s Supreme Court decided that Zambian villagers had the right to sue India-listed mining company, Vedanta, in England.

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.

Economy

Waltersmith’s 5,000bpd Modular Refinery in Imo State to Commence Operations

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5,000bpd Modular Refinery Built in Imo State to Start Operations

The Department of Petroleum Resources (DPR) has said the 5,000 barrels per day Modular Refinery project built in Imo State is ready for operations.

Sarki Auwalu, the Director, DPR, disclosed this during a pre-commissioning visit to the project site in Ibigwe, Imo State.

In a statement released by Waltersmith, Auwalu was quoted as saying the purpose of his visit was to ensure that the refinery was ready to commence operations.

He said “We can confirm that the refinery is very much ready to commence operations. We have seen all the preparations.

“To us, the plant is alive. The commissioning is just symbolic. Everywhere is ready to start off. My overall assessment is excellent.

“We have been to other modular refineries but we have not seen anything like this – the space, the way it is arranged and the way it will work.”

The 5,000 barrels per day modular refinery is scheduled for inauguration this month. The refinery has crude oil storage capacity of 60,000 barrels and it is expected to deliver more than 271 million litres per year of refined petroleum products.

Auwalu said, “The role we play is to enable businesses and create opportunities. When DPR issues you a licence, it enables you to invest and as a result of that opportunity we create, that business is enabled.

“Waltersmith is one of our success stories. We consider the project as ours. We have been tracking their growth and we are happy to see that our child is growing. It is our plan that they expand and they have the potential.”

Speaking on the project, Abdulrasaq Isah, the Chairman, Waltersmith Refining and Petrochemical Company, said the project is the first phase of a series of refinery projects that will lead to the delivery of up to 50,000 barrels per day in refining products.

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OPEC Fund, West African Development Bank Agree to Improve Corporation in West Africa

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OPEC Fund and West African Development Bank (BOAD) Agreed to Deepen Corporation in West Africa

The West African Development Bank (BOAD) and the OPEC Fund for International Development have signed an agreement to further deepen their development corporation in the member nations of the Western African Economic and Monetary Union (WAEMU).

The member nations include Benin, Burkina Faso, Côte-d’Ivoire, Guinea-Bissau, Mali, Niger, Senegal and Togo.

According to the statement released by the two organisations, the agreement reached will increase engagement and knowledge-shareing between the two institutions and ensures improved cooporation in terms of co-financing public and private sector projects.

The OPEC Fund and West African Development Bank (BOAD) boost cooperation in Western Africa

The agreement focuses on increased engagement and knowledge-sharing between the two institutions and ensures enhanced cooperation in co-financing public and private sector projects.

It will also support international trade and regional trade integration to enhance economic productivity in the region. It will help mitigate the negative impact of COVID-19 on the region and strengthen the economy of the West African region.

Dr. Abdulhamid Alkhalifa, Director-General, OPEC Fund, who signed on behalf of the organisation said: “We are pleased to grow our partnership with BOAD to work together toward our common cause. West African countries have significant potential to increase trade flows and strengthen competitiveness which will drive growth, reduce poverty, and create new jobs in the region. The OPEC Fund’s global expertise, combined with BOAD’s strong regional presence, positions our two institutions well to help the region to weather the impacts of the pandemic and improve its competitiveness within the global economy.”

Serge Ekué, the President of BOAD, commended “the commitment and growing partnership between Africa and the OPEC Fund, which translated into support to BOAD for several decades now, thereby contributing to growth and sustainable development in the WAEMU member countries.” He added that the implementation of this framework agreement will help support the objectives of BOAD’s new strategic plan for 2021-2025, with the “aim of increasing the impact of its operations in terms of development outcomes by funding productive investments and creating jobs for youth and women, while focusing on micro-, small- and medium-sized enterprises (MSMEs), transport infrastructure and digitalization, agriculture and food security, energy, real estate, health and education.”

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More Stimulus is Welcomed – But What’s Needed is Smarter Stimulus

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UK EConomy contracts

Stock markets are cautiously upbeat that a stimulus package can be agreed in the U.S. before the November 3 election – but even if it does happen, it’s likely to be a “short-lived sticking plaster” that masks the major long-term issue: unemployment.

This is the warning from Nigel Green, CEO and founder of deVere Group, one of the world’s largest independent financial advisory and fintech organizations.

It comes as House Speaker Nancy Pelosi and Secretary Steven Mnuchin spoke again on Tuesday – the deadline imposed by the Speaker – as the two sides try and strike a deal over another significant fiscal stimulus package ahead of the election.

Earlier this month, Republican senators slammed a $1.8 trillion offer made by the Trump administration to the Democrats as too big, an offer Ms Pelosi dismissed as “insufficient.”

Discussions are due to continue on Wednesday upon the Secretary’s return to Washington.

Nigel Green warns: “No doubt, a breakthrough of the deadlock that would allow for more stimulus would provide a lifeline to millions and millions of Americans.

“U.S. and global markets are, generally, cautiously optimistic that a deal can be agreed by the two sides.

“There’s a sentiment that something will have to materialize – and this is fueling markets.

“However, the window of opportunity is closing and it is not yet a done deal.

“If talks collapse, the markets will inevitably be disappointed and there’s likely to be a short-lived sell-off.”

He continues: “Even if Pelosi and Mnuchin can get another massive stimulus package agreed, and U.S. and global markets rise, this is likely to serve only as a sticking plaster.

“A market rally is going to be difficult to be sustained due to the enormous uncertainty created by other factors including the presidential election, a possible looming constitutional crisis in the world’s largest economy, and the growing Covid-19 infections in America and other major economies.”

The deVere CEO goes on to add: “Getting over the political impasse would help boost the economy and deliver much-needed money to Americans, but the major, lasting issue triggered by the pandemic remains: mass unemployment, which will hit demand, growth and investment.

“As such, a swift rebound for the U.S. economy is doubtful as unemployment claims continue to rise.

“That V-shaped recovery talked about by so many? That will be impossible with so many millions facing long-term unemployment.”

Whilst it is certainly positive that unemployment has fallen from 15% in the U.S. to 11% in recent weeks, it should be remembered that this is still at the same rate of the 2008 crash.

In addition, a second wave of soaring unemployment could hit imminently as some support measures wind-down and business’ and households’ savings and resources have been already run-down.

Mr Green concludes: “Near-term support for sure, but a long-term strategy – a multi-year vision – for growth and investment is essential.

“What’s needed is not just more stimulus, but smarter stimulus.”

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