Kachikwu: Nigeria to Pay IOCs $5.1bn Discounted Cash Call Debt in Five Years

• Arrangement will not affect 2.2mbpd budget production benchmark •Minister inaugurates board of PPPRA, PEF and PTI
Chineme Okafor in Abuja
The Minister of State for Petroleum Resources, Dr. Ibe Kachikwu, yesterday disclosed that the discounted $5.1 billion cash-call debt owed International Oil Companies (IOCs) by Nigeria over a long period would be paid off within five years.

Although Kachikwu did not state when the repayment would begin, he however stated that the repayment timeline was part of the concessions Nigeria got from the IOCs for discounting a whopping $1.7 billion from the cash-call arrears.

He recently disclosed at the 72nd National Economic Council (NEC) meeting that through negotiations with the IOCs, the $6.8 billion past due cash-calls burden on the federation was reduced to $5.1 billion, to be paid on an improved oil output.

Speaking after declaring open the inaugural meeting of the National Council on Hydrocarbon in Abuja, Kachikwu also said within the agreement, the payment from incremental oil production will not affect Nigeria’s budget production benchmark of 2.2 million barrels per day (mbd).

He added that the discount translates to almost N8 billion in savings to the country.
“The first concession obviously is the fact that the country got a discount of $1.7 billion, and that is going to be paid over a period of five years and it will be paid from incremental volume of production and so we are not lynching into our 2.2mbpd to be able to pay for that.

“I think literally when you look at it, it almost translates into fiscals of N8 billions in savings for the government which is very good,” Kachikwu stated.

When asked what the country’s oil production was at the moment following reports of recent production disruptions in the Niger Delta, the minister said: “Still not where we should be. These days I am almost cautious of giving figures so that I don’t attract attention unnecessarily but obviously the Forcados incident did impact us, but my guess is that we are moving closer to 1.9mbpd at this point.”

He said President Muhammadu Buhari approved the formation of the National Council on Hydrocarbon and that its responsibilities will be advisory.
“It is a fact and ideas gathering team, and so everybody presents their opinions, both the military, traditional rulers and stakeholders who would contribute ideas to the hydrocarbon council.

“So, we are basically telling Nigerians, this is your product; this is your economy and issues, what ideas do you have in terms of engagement of communities to help them become part of the policy making process,” Kachikwu noted.

He said it was important that all Nigerians become a part of the policy-making processes in the oil and gas industry, stating that the government was in a hurry to get the oil industry work for Nigeria’s development.

“There is so much, happening in this sector, I am sure if you are following the trajectory of our movement, you will see we are racing that against time.

“So much to do; in terms of refineries which we want by 2019 to move out of importation, funding of the upstream, restructuring of the NNPC, and passage of the long sought-after Petroleum Industry Bill (PIB) or the Niger Delta issues, there is an overload of activities. I urge all of you to pay more interest in this, we need to have creative thinking to the solutions,” he added.

Meanwhile, Kachikwu has formally inaugurated the management board of three parastatals in the ministry – Petroleum Products Pricing Regulatory Agency (PPPRA),  Petroleum  Equalisation  Fund  (Management)  Board  (PEF), and the Petroleum Training Institute (PTI).

The government had in May 2016 constituted board members for the agencies. PPPRA for instance has a former Managing Director of the Pipeline and Products Marketing Company (PPMC), Alhaji Mohammed Buba, as its board chair.

But speaking at the inauguration ceremony yesterday in Abuja, Kachikwu said the new boards  were  coming  at  a  time  when  the  global  petroleum  industry  is witnessing  a  downturn  in  fortuneswhich  has  also  translated  to  reduction  in revenue  levels  from  petroleum  by  most  producer  nations.

He stated that the composition  of  the  boards  was thorough and persons  who  have  both  the  experience  and  knowledge  to  guide  the  three parastatals  into  harnessing  their  potential  and    fulfilling the  nation’s expectations at this challenging times were selected.

“Last  week,  Mr. President  inaugurated  the  boards  of  NNPC,  NCDMB  and NNRA  under  the  ministry  of  petroleum  and  he  charged  them  to  achieve  a  key objective  of  this  administration  which  is  to  institutionalise  transparency  and accountability in the agencies in this critical ministry.

“Mr.  President  expects  you  to  take  full  leadership  and  drive  the  complete reforms  of  these  parastatals  and  work  closely  with  their  heads,” Kachikwu said.

He further stated: “For  PPPRA,  the  expectation is of  the  board to  provide  the  necessary  steers and  guidance  to  the  management  on  ensuring  the  maintenance  of national petroleum  products  sufficiency  and ensure  the  growth  of  the  petroleum products strategic reserves.
“For  PEF,  the  expectation  from  the  members  of  the  board  is  for  them  to  ensure that  the  automated  product  tracking  system  from  depots  to  stations is completed  nationwide  and  every  molecule  of  petroleum  product  is  tracked  to the retail station.

“For  PTI,  the  expectation  from  the  members  of  the  board  is  for  them  to superintend  the  transformation  of  PTI  to  world  class  oil  and  gas  training institute  that  run  commercially  viable  courses  and  grow  the  number  of  high value  clients  within  the  industry  and  make  it  a  cynosure  institution  in  the continent.”
The minister noted that all parastatals  must  be  placed  on  the  path of better performance  and  efficiency.

He also stated that they must work towards  financial  sufficiency  and  move  away  from  getting subventions from the government, in addition to imbibing sufficient transparency in their activities.