The Federal Government has so far paid $4.04bn to five international oil companies as cash call arrears repayment and has spent N12.43bn this year on pipeline protection and maintenance, it was learnt on Sunday.
Latest update on pipeline security/maintenance cost obtained
from the Nigerian National Petroleum Company Limited showed that the N12.43bn
was spent by the government through NNPC between January and June this year.
Figures from the oil company indicated that pipeline
security/maintenance gulped N1.1bn, N368m and N2.61bn in January, February and
March 2022 respectively.
The NNPC spent N498m in May and N8.35bn in June to secure
and maintain its pipelines, while the firm subtracted N464m in April from the
total amount during the review period.
Nigeria’s crude oil production has continued to slump due to
the repeated vandalism of pipelines and attendant theft of humongous volumes of
crude.
The N12.43bn spent in the first six months of this year to
protect pipelines came as the oil company recently contracted the surveillance
of its pipelines to a contractor, a development that elicited diverse
reactions.
On August 30, 2022, NNPC said its award of multi-billion
naira pipeline surveillance contract to a former leader of the Movement for the
Emancipation of Niger Delta, Government Ekpemupolo, popularly known as Tompolo,
was the “right decision.”
The Group Chief Executive Officer, NNPC, Mele Kyari, had
told journalists in Abuja recently that the decision was due to the need for
Nigeria to hire private contractors to man its oil pipeline network due to a
massive oil theft.
He said, “The security agencies are doing their part.
End-to-end pipeline surveillance would require the involvement of private
entities and community stakeholders.
“We need private contractors to man the right of way to
these pipelines. So, we put up a framework for contractors to come and bid and
they were selected through a tender process. And we believe we made the right
decision.”
Total payments to date (July 31, 2022) to Total and Agip by
NNPC were $545.86m and $634.22m, while outstanding balances to the companies
were put at $65.11m and $140.44m
respectively.
The total renegotiated debt between the government and the
five IOCs was 44.689bn, while $4.04bn has been paid so far, leaving a balance
of $652.66m.
In 2016, the national oil company signed the cash call
repayment agreements with the five IOCs to defray the cash-call arrears within
a period of five years after many years of its indebtedness to JV partners.
Also, the government, through the Federal Ministry of
Petroleum Resources, negotiated a discount with the five IOCs in December 2016.
The negotiations led to the reduction of the debt from about
$5.1bn to $4.68bn, as the Federal Government, through NNPC, had since continued
to reduce the debt payments in installments.
The government has received commendations for the repayment
of the cash call arrears and has been encouraged to continue. Experts said the
delay in settling the debts had contributed in slowing oil sector investments
in Nigeria.
“You cannot owe me billions or millions of dollars and still
want me to invest additional billions or millions in your country when I’m not
sure of getting the money you owe,” a former President, Association of National
Accountants of Nigeria, Dr. Sam Nzekwe, stated.
He, however, lauded the government for striving to clear the
cash call arrears, adding that “this would mean well for the oil sector and
would encourage investors to invest in the industry, though the sector has its
own challenges at the moment.”
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