FG Signs Joint Venture With Oil Companies, to Clear $6.8 Billion Debt Arrears in 5Yrs

FG Signs Joint Venture With Oil Companies, to Clear $6.8 Billion Debt Arrears in 5Yrs

The Nigerian government has signed a new joint venture agreement named ‘Unincorporated Joint Venture’ with Shell, Chevron, NAOC, Exxon Mobil, Total & Oando that will enable it clear a debt arrears of $6.8 billion over the next five years.

Speaking to journalists after the signing of the agreement, Minister of state for Petroleum Resources, Ibe Kachikwu said the agreement will enable the government to save up $1.8 billion over a period of five years.

“Basically, it’s a cash call exit. How do we get oil companies to fund their operations? What we have done is that for the first time in over 30 years we have been able to get the funding structure firmed up and made a bit predictable through allowing IOC to charge the technical cost of operation out of the revenue and in sending the net amount to the federation and whatever else they require, they would have to go borrow,” he said.

“We have to change the governance of the new UJV, the effect of that governance implication will be that we would be faster in terms of application. We would move from $6.8 billion of our outstanding to $5.1 billion.

“What that means is that we would be able to shave off  $1.8 billion in favour of the government in a period of five years it’s going to pay for incremental volume, not current volume. Going forward we have adjusted the template upfront before it gets to government and in a year to year basis, over $2 trillion dollars savings,” he added.

EXPLAINER on ground-breaking Joint Venture Cash Call Exit Agreement signed by @fmprng with Shell, Chevron,NAOC, ExxonM, Total & Oando, today pic.twitter.com/9nMWK6Ulck

— Govt of Nigeria (@AsoRock) December 15, 2016