The federal government through the Nigeria National Petroleum Corporation (NNPC) was only able to pay $266.141 million out of an outstanding balance of $1.730 billion of Joint Venture (JV) cash calls in the last one year, THISDAY investigation has revealed.
A review of documents presented by the national oil company’s to the Federation Account Allocation Committee (FAAC) between May 2020 and May 2021, revealed that there is now a balance of about $1.464 billion after the last payment, which was made three months ago.
Essentially, cash calls are requests sent by JV operators to non-operating partners for payment in the light of anticipated future capital, operating expenditures or need of additional capital contributions.
The NNPC, in 2016, signed a cash call repayment agreement with its JV partners to defray cash-call arrears within a period of five years after many years of its indebtedness to its partners as it consistently failed to meet up with its indebtedness.
However, the documents showed that while total negotiated debt in May 2020 stood at $4.689 billion with total payment of $2.958 billion, in May 2021, total payment rose to $3.224 billion, still leaving an outstanding sum of $1.464 billion in debt.
As of the last report by the NNPC, total payment to Shell Petroleum Development Company (SPDC) since the federal government began offsetting the arrears stood at $455.3 million, with an outstanding of $917.20 million, while the entire debt of $833.75 million owed Mobil Nigeria had been cleared.
Chevron Nigeria Limited, which was initially owed $1.097 billion, now has a balance of just $34.77 million, Total is being owed $215.581 million, while Agip has an outstanding sum of $297.230 million yet to be paid. Till date, $1.464 billion of the initial $4.689 billon has been paid.
Data released by the NNPC in March this year indicated that a total of $3.118 billion cash call debts had been paid the five major international oil companies (IOCs), leaving an outstanding debt of $1.570 billion.
In December 2016, the Ministry of Petroleum Resources negotiated a discount with the IOCs, comprising SPDC, Total, Mobil, Chevron and Agip from about $5.1billion down to $4.6 billion and had since then continued to reduce the debt payments.
SPDC, which was owed a negotiated debt of about $1.37 billion, had been paid $455.3 million as at the end of January this year, while TEPNG, which was owed $610.972 million, had got $364.6 million. NAOC to which the NNPC owed $774.66 million received $422.66 million and CNL got $1.042 billion out of its outstanding negotiated debt of $1.097 billion.
As of January 31, 2021, the NNPC stated that its debt obligations to SPDC, CNL, TEPNG and NAOC respectively stood at $917.2 million, $55.4 million, $246.3 million and $351.9 million.
The NNPC further explained that in the case of SPDC, repayment was from the price balance distribution on Project Santolina; while in the case of CNL, repayment was from price balance distribution on Projects Cheetah and Falcon.
“NNPC has fully repaid its cash call arrears to MPN and all incremental barrels have reverted to base,” the NNPC stated.
The cash call arrangements, under which NNPC had to pay for its 55 per cent 60 per cent share of investment in the upstream joint ventures, have been in place for over 40 years before it was restructured.