The Nigerian National Petroleum Corporation (NNPC) has suspended cash call repayments to Italian oil major, Eni, for three months and did not plan to renew some of the firm’s asset licences.
NNPC owes billions of dollars to international oil companies (IOCs), including Eni, its share of operating costs for their joint ventures, better known as cash calls.
The corporation, has however, paid over $2 billion of the debt, which was originally $5 billion.
This is coming as the Supreme Court in London will hear an appeal by Nigerian farmers and fishermen to pursue claims in England against oil major, Shell, over oil spills in the Niger Delta, lawyers for the two affected communities said yesterday.
NNPC’s refusal to pay Eni’s cash calls followed some disputes, which have hindered development of some of the country’s oil assets.
NNPC has also disclosed its unwillingness to ensure the renewal of Eni’s expired licences.
In a statement yesterday by NNPC’s spokesman, Mr. Ndu Ughamadu, the corporation promised to work closely with Agip to speedily resolve all pending issues that led to the suspension of the cash-call repayment.
The Group Managing Director (GMD) of the corporation, Mallam Mele Kyari, made the commitment on Tuesday during a business visit by a delegation from ENi/Agip led by the Executive Vice Chairman, Sub-Saharan African Region and Chairman ENI Exploration and Production in Nigeria, Mr. Brusco Guido.
The statement quoted Kyari as saying that the failure to pay cash call arrears in the last three months was deliberate and meant to ensure that the issues surrounding the agreement settled.
“The money is there, it is ready. We will pay as soon as the issues are resolved by the end of the week,” Kyari stated.
On the issue of some of the expired assets, the GMD said there was no immediate plan to renew the licences as the federal government was interested in having the exploration and production arm of the NNPC, the Nigerian Petroleum Development Company (NPDC), operate them.
On the Okpai Independent Power Project, Kyari said the issues that led to the delay in payment had been resolved and payment would be done as soon as possible.
“We will work with you. You can count on us,” he assured the Agip team, urging them to fast-track the Phase 1 of the rehabilitation of the Port Harcourt Refinery to ensure that it was delivered before the scheduled date of October 2019.
Earlier, Guido had said the company aligned with the GMD’s three-point agenda of growing reserves, growing production, and cutting cost.
He, however, listed some challenges that had hampered its operation and urged the NNPC management to help resolve them in order to meet its target of growing production from the JV assets by 30 per cent over last year’s rate.
Meanwhile, NNPC has restated its commitment to the prompt payment of proceeds from its operations to the Federation Account and steady supply of petroleum products to Nigerians.
Its Chief Financial Officer (CFO), Mr. Umar Ajiya, renewed the commitment at a strategy session in Abuja with heads of Accounts Department of the corporation’s subsidiaries.
Another statement yesterday by Ughamadu stated that the meeting was part of the initiatives to rally the corporation’s business leaders in support of the new management’s agenda.
Ajiya stated that the strategic role of the Accounts Directorate was crucial to the realisation of the new GMD’s goals and objectives, stressing that there was need for all managers of accounts to improve on deliverables.
“This important meeting is to ensure that the management of Finance and Accounts Directorate corporate-wide are properly briefed on the direction of the new NNPC management and work as a team to deliver on the GMD’s commitments to the nation among which are: paying what is attributable to the federation by way of FAAC remittances and meeting up with obligations to all stakeholders as and when due,” he said.
The CFO listed eight key areas where the Accounts Directorate can help in actualising the GMD’s agenda to include: liquidity management; financing for growth; business process improvement, budget and budgetary controls payment system, cost control/discipline, real-time financial reporting, capacity building, autonomy for SBUs, and maintenance of pension funding.
He stated that the GMD’s mandates and commitments had financial implications and the directorate was looking ahead and ready to implement the direct debit and cash sweep mechanism to grow other businesses for a more viable corporation.
Ajiya said under his watch, SBU autonomy would be enhanced but such freedom must be tied to the responsibility of going beyond self-funding to contributing to the general purse.
Source: This Day