Nigeria has so far repaid a total of $3.72bn in debt to five international oil companies (IOCs), leaving an outstanding balance of $971.8m.
Gatekeepers News reports that this was contained in the latest updates on Nigeria’s cash call arrears repayment released by the Nigerian National Petroleum Company Limited on Friday in Abuja, the nation’s capital.
The five IOCs include Shell Petroleum Development Company, Mobil Producing Nigeria, Chevron Nigeria Limited, Total Exploration and Production Nigeria, and Nigeria Agip Oil Company.
According to reports, Nigeria’s total cash call arrears to the firms was initially $4.689bn before it was cut down to the current amount of $971.8m after various repayments by the Federal Government through the NNPC.
Cash calls are sent by joint venture operators to non-operating partners for payment in the light of anticipated future capital, operating expenditures or the need for additional capital contributions.
The Federal Government through NNPC had over the years piled up unpaid bills, referred to as cash calls, which it was obliged to pay the IOCs with which it had joint ventures for oil exploration and production.
Figures from NNPC showed that the national oil company had cleared its total negotiated debts with both MPN and CNL, which were put at $833.75m and $1.097bn respectively.
The oil firm’s total negotiated debts with SPDC, TEPNG and NOAC were outlined as $1.37bn, $610.97m and $774.66m respectively, out of which the total payments to date by NNPC to the three IOCs were $777.4m, $458.91m and $550.01m respectively.
This leaves an outstanding balance of $595.1m to SPDC, $152.06m to TEPNG and $224.65m to NAOC.
Industry analysts, while reacting to the development, stated that the delay in the repayments of cash call arrears by Nigeria to IOCs had hindered oil and gas investment across the country.
They, however, commended the Federal Government and NNPC for the repayment of the debts, stressing that this would boost investor confidence in Nigeria.
The Chief Executive Officer, Centre for the Promotion of Private Enterprise, Dr Muda Yusuf, explained that the delay in cash call repayments had been a drag on the growth of Nigeria’s oil sector.
He said, “I think we should commend the government and NNPC on this because I know that the cash call arrears are normally far more than what it is now. So for them to have cleared them to the level that we are now talking about it being under $1bn is something to be commended.
“However, it is important to point out that this issue of cash call arrears has been a major bottleneck to the growth of our oil and gas sector, because each time that the private IOCs and other oil producers put their money down, most times the government is not able to put its own cash call in terms of the counterpart funding.
“And these things have a way of slowing down the growth of investments in the sector. So the fact that this has been cleared significantly is something for which we must commend the government and NNPC. But the bigger reform is actually to get the government to exit completely and allow this sector to run as a purely private enterprise.”
