Cash Call debts: FG pays $400m first tranche to IOCs

Minister of State Petroleum Resources, Emmanuel Kachikwu
  • As Commission on N6bn Kano Emirate Council probe dispels speculation of EFCC’s involvement

The Federal Government said it had released 400 million dollars to settle outstanding Joint Venture cash call debts owed International Oil Companies (IOCs).

Minister of State for Petroleum Resources, Dr Ibe Kachikwu, made this known in Houston, U.S. on Tuesday while speaking to reporters on the sidelines of ongoing 2017 Offshore Technology Conference (OTC).

Kachikwu said that the money was paid to the IOCs last week and that the balance would be defrayed within a year.

He explained that the payment was part of a 1.2 billion dollar cash call debt owed the IOCs in 2016.

He explained that it was different from the discounted 5.1 billion dollars cash call arrears it negotiated in December, 2016 with the IOCs.

“At the time that we did the joint venture review that we came up with, we had two components to it. The first was the 6.8 billion dollars arrears covering about six years which were owed the oil companies.

“In our negotiations, we were able to trim that down to about 5.1 billion dollars; so, we knocked off 1.7 billion dollars out of it and then spread the 5.1 billion dollars over the next five years.

“This is to be paid from incremental production, not from existing production.

“In other words, they will have to go and find new oil and from that new oil, we pay that money because we didn’t want to imperil the 2.2 million barrel that everybody was already used to,” he said.

The minister also said that the second tranche of the money which was not in the 6.8 billion dollars or the 5.1 billion dollars, “depending on where you land, was a figure of about 1.2 billion dollars which represented only 2016 arrears’’.

He, however, said that the oil companies insisted that the money needed to be paid out completely because they couldn’t begin to add that to the 5.1 billion dollars.

“We eventually agreed to pay several tranches; 400 million dollars out of that for the first tranche and then, the remaining 700 million dollars paid on monthly installments for a period of one year.

“In other words, that will roughly be about 60 or 70 million dollars every month after the first 400 million dollars.”

Kachikwu said that the payment was a milestone that would redeem investor confidence in Nigeria’s abilities to keep to her word.

According to him, the payment of the first 400 million dollars will jump-start the whole process of crystallising agreements that have been reached on Joint Venture funding.

“We have made provisions through the Central Bank for the payment of the balance on a monthly basis. This will stimulate IOCs to pick up their appetite to invest in existing and new projects in the country.”

In the meantime, the Kano State Public Complaints and Anti-corruption Commission says the EFCC is not involved in the ongoing investigation of the Kano Emirate Council over alleged misappropriation of N6 billion.

The Chairman of the commission, Mr Muhiyi Magaji, told the Press in Kano on Tuesday that the speculations in the social media over the involvement of EFCC operatives were false and an attempt to distract the probe.

The reports alleged that EFCC operatives jumped fence into the Emir Muhammdu Sanusi’s building in the Palace and carted away some documents.

Reacting to the development, Magaji said the rumour was not only baseless, but unfounded and a deliberate attempt to cause confusion in the state.

“Yes, I met with the EFCC Chairman, Mr Ibrahim Magu, last week, but it was on the general activities of the commission as well as its success or achievements.

“We have not handed over this case to EFCC, so how can their operatives storm the Emir’s Palace and locked some offices as being peddled.

“Any contrary information on my meeting with the EFCC chairman is not only baseless but untrue and unfounded, so people should disregard it,” Magaji said.

On the recent reconciliation meeting convened by some northern state governors to intervene in the Gov. Abdullahi Ganduje and Sanusi’s feud, the anti-graft boss said the commission had no business with the meeting.

“The state government did not ask us to do what we are doing and did not also ask us to stop.

“The Kano State Public Complaints and Anti-corruption Commission Law 2008 (as amended) provides for the independence of the commission.

“In exercising its powers under the law, the commission shall not be subjected to the direction and control of any authority.

“As such the commission is only attached to the government to address administrative issues but not operational.

“So we are acting on the petition and any other thing is secondary to the commission,’’ he said.

Magaji said the commission would go ahead with the investigation into the alleged misappropriation of funds by the emirate council.

He disclosed that all those invited had indicated their willingness to honour the invitation on Wednesday (May 3), and not Tuesday (May 2) as being speculated.

“Initially we gave all those invited to appear before the commission on May 3 not May 2.

“Some have indicated their willingness to appear on the stated date,’’ said the chairman.