BY Mayowa Tijani
The ministry of petroleum resources, under the leadership of Ibe Kachikwu, has put an end to the country’s long term joint venture cash calls.
At a score card event held by the ministry in Abuja on Thursday, Nigeria signed an agreement with Shell, Chevron, NAOC, ExxonMobil, Total and Oando, to exit the joint venture cash calls.
The agreement will see Nigeria pay the oil companies about $5.1 billion, over a billion less than the original debt owed by the federal government on previous cash calls.
The new system, which would take effect from 2017, would see the government’s revenue rise by $2 billion annually, with more transparency expected in the oil sector, Kachikwu disclosed in Abuja.
While delivering his budget speech on Wednesday, President Muhammadu Buhari said the new funding mechanism will allow for cost recovery in the oil sector.
“We will continue our ongoing reforms to enhance the efficiency of the management of our oil and gas resources,” Buhari said.
“To this effect, from January 2017, the Federal Government will no longer make provision for Joint Venture cash-calls. Going forward, all Joint Venture operations shall be subjected to a new funding mechanism, which will allow for Cost Recovery.
“This new funding arrangement is expected to boost exploration and production activities, with resultant net positive impact on government revenues which can be allocated to infrastructure, agriculture, solid minerals and manufacturing sectors.”
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