NNPC reduces its cash call arrears to JV partners by US$1.5 billion
The Nigerian National Petroleum Corporation (NNPC) via its group managing director Maikanti Baru; said it has repaid US$1.5 billion of the cash call arrears owed to its foreign oil partners. The director who made the statement at the National Association for Energy Economics, NAEE, International Conference said; “So far, we have repaid over US$1.5 billion out of the US$5.1 billion cash call arrears to date.”
Evidently, this proves that efforts by Nigeria to reduce debt owed to its Joint Venture (JV) partners (who are International Oil Companies (IOCs) doing business in the country) is progressing well.
NNPC owns 57% stake in a joint venture with IOCs including Shell, ExxonMobil, Chevron, Total and Eni. These IOCs account for 85-90% of Nigeria’s oil production which have rebounded to around 2 million barrels per day (b/d).
According to Baru, this US$1.5 billion part payment of the cash call arrears has not only restored the confidence of IOCs and the JV partners; but it has also led to improved reserves growth and crude oil production.
Back in 2016, reports showed that NNPC owed its foreign partner companies about US$6.8 billion in counterpart funding – also known as cash calls. After negotiations, in December 2016 they received a US$1.7 billion discount; reducing the total debt to US$5.1 billion. Since then the country have slowly started paying off its debt and have also stopped incurring more debt.
Baru reported that; 2018 is the second year in row that NNPC is concluding the fiscal year without any cash call arrears. Also according to NNPC’s December 2018 operations and financial report; the corporation transferred a total of US$4.56 billion to its JV cash call account.
On the rise in Nigeria’s oil production, industry officials and analysts believe that the relative peace in the Niger Delta and Nation’s commitment to settle its cash call debts in the last two years are also key factors.