NNPC set to repay $5.1bn joint venture debts

By Patrick Andrew
Abuja

The Nigerian National Petroleum Corporation (NNPC), says it has developed an alternative funding strategy that would facilitate the repayment of $5.1 billion joint venture debts.
The debts, which accumulated over 14 years period, was initially valued at estimated $6.8 billion, but following negotiation and reconciliation a discount of $1.7billion was granted to the corporation, leaving the balance of $5.1 billion to be repaid.
Accordingly, the NNPC said it has developed a clear payment plan agreed upon by all parties, stressing that the debts would be offset following carefully laid out repayment plan within reasonable period.

NNPC Group Managing Director, Dr. Maikanti Baru, said in a release signed by the corporation’s spokesman, Mr. Ndu Ughamadu, that the NNPC has adopted strategies to ensure the corporation’s operational profitability, noting for instance the renegotiation of all existing contracts which had enabled his Management Team achieve substantial value realisation of between 5-30 per cent discounts.
“This feat was achieved by developing a clear payment plan as well as the pursuit of an alternative funding strategy. The arrears of up to December, 2015 have been fully reconciled, with repayments plan also agreed upon.

“The ultimate objective of the recently signed off agreements between NNPC and the JV Partners, was to enable NNPC transit into an Incorporated Joint Venture (IJV) business model for all the current Joint Ventures, JVs,” the GMD said, noting that the corporation would gradually clear the accumulated debts soonest.
Blueprint recalls that at the signing of the agreement in Abuja at the Ministry of Petroleum Resources between the Federal Government and Shell, Chevron, Agip, Total, Oando, the Minister of State for Petroleum Resources, Dr. Ibe Kachukwu, explained that the agreement on the payment from incremental oil production would not affect Nigeria’s budget production benchmark of 2.2 million barrels per day (mbpd).

Instead, he said, the signage would bring more investments into the country as well as resolved long standing issues of unpaid cash call arrears, under-funding the joint venture and the burden of monthly payments by the Nigerian government.
He regretted that the inability of the NNPC to regain technical costs had been a major reason for the accumulation of the arrears over time, but added that under the new funding model, government would continue to receive royalties, taxes and profit from its equity share of Joint
Venture oil and gas production.
Meanwhile, the corporation said it had created security management platforms that would enable it identify and evaluate risks, develop and superintend implementation of investigations, and aggregate and deploy necessary resources to guarantee peaceful business environment in the region.
Baru said the NNPC was committed to implementing a robust security and stakeholders’ strategy that would ensure that peace reigns in the industry’s operational areas.