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Joint Ventures financing gulps N7.5trn in 5 yrs – NEITI

The Nigeria Extractive Industries Transparency Initiative (NEITI) has  lauded the federal government for terminating the  cash call payments on Joint Venture (JV) agreements with major…

The Nigeria Extractive Industries Transparency Initiative (NEITI) has  lauded the federal government for terminating the  cash call payments on Joint Venture (JV) agreements with major international oil companies (IOCs) saying N7.5 trillion was spent on financing the arrangements in five years.

In a statement by the spokesman, Dr. Orji Ogbonnaya Orji, the agency said ending the funding arrangement which lasted for 40 years, was a timely decision, bold, courageous and a huge relief given the avoidable huge debt burden which JV cash payments imposed on the country in the past.

Daily Trust reports that the Minister of State, Petroleum, Dr. Emmanuel Ibe Kachikwu, led top officials of the Ministry of Petroleum Resources and heads of IOCs to sign the Cash-call exit last Thursday in Abuja.

“We note that all NEITI independent audit reports on the oil and gas industry since the last 10 years had alerted the nation that the management of JV Cash Call regime had constituted drain pipe to the country’s scarce oil and gas revenues,” the statement said.

Giving the instance of spending by the federal government, NEITI said its reports showed that from 2009 to 2013, the Nigeria National Petroleum Corporation (NNPC) had made total Cash Call payments of N7.5 trillion. While N2.4 trillion was paid in local currency, the greater transaction of $16.2 billion (about N5.1 trillion) was in foreign exchange, it said.

NEITI said its reports equally expressed concern on the lapses in the management of the cash call and the wider implications to huge revenue leakages.

A breakdown of the naira components shows that N460.24 billion was paid in 2009, the amount was N441.44 billion in 2010. In 2011, N416.58 billion was paid; in 2012, the figure rose to N612.93 billion while in 2013 N492.81 billion was paid as Cash Call to JV operations. For the payments in foreign currency, $3.73 billion was paid in 2009, and it increased to $3.78 billion in 2010 while $2.60 billion was spent in 2011. The total cash call payments for 2012 and 2013 were $3.10 billion and $2.98 billion, the reports showed.

“One immediate benefit is that it will free the country from complex financial burden and allow the resources to be channelled to other national priorities,” NEITI stated.

It said a key finding and recommendation of its independent audit reports that had been neglected over the years had been implemented as part of the ongoing reforms.