Nigeria’s under fire Finance Minister, Kemi Adeosun says she has found a way to get NNPC to meet its cash call obligations without having to dip into the Federation Account.
According Reuters, JV’s will be “allowed to borrow money” to fund cash calls which are required to fund operations required to ensure Nigeria continues to produce oil. Apart from the attacks on Oil installations, Nigerian Joint Venture Companies still face financial constraints in raising enough capital to fund crude oil production. Industry sources reveal that billions in arrears are owed to employees and contractors of the JV’s.
According to Reuters, the minister said the Nigerian National Petroleum Corporation (NNPC) had spent 110 billion naira ($360 million) on cash calls this month, which dwarfed the country’s 41 billion naira income from oil production over the same period.
NNPC also owes several billion in back debt to oil companies from unpaid cash calls, which oil worker unions say is stalling the creation of jobs and investment.
“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.”
Adeosun told Reuters in April the government was thinking of forcing the cash calls, which are for international and local joint venture partners, out of budget funding and into so-called modified carrier arrangements.
Modified carry agreements are loans provided by large international oil companies to the NNPC for investing in oil exploration and production projects.