NNPC Sets Three-year Target to Transit to Incorporated Joint Venture

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  • .Imports 10.7bn of products in 2016

 

 by Chineme Okafor in Abuja

The Nigerian National Petroleum Corporation (NNPC) has said it would take it at least three years to fully transit some of its existing oil production joint ventures (JV) into the Incorporated Joint Venture (IJV).

The corporation said it had initiated processes, which include the restructuring of its Exploration and Production (E&P) arm, the Nigerian Petroleum Development Company (NPDC) and payment of outstanding cash call debts to joint venture partners in preparation for the transition of the JVs into IJV.

As part of its activity update, it said in its latest monthly production and financial report covering December 2016 that: “The corporation has signed off agreements with JV partners to enable NNPC pay off the cash call arrears, exit cash call funding mechanism and transit into an Incorporated Joint Venture (IJV) within the next three years.”

It further added that: “Various activities to re-kit NPDC for efficiency and profitability through cost optimisation efforts and setting up asset management teams with the intention of transiting to Incorporated Joint Venture Companies (IJVs) with the JV partners,” has also started.

The Federal Government in December 2016 announced its exit of joint venture cash calls arrangements it had with international oil companies operating in Nigeria, thus allowing the NNPC and operators raise money for their operations outside of the government’s budgets and controls.

Under the IJV arrangements, JVs will be turned into firms that control their own budgets, similar to existing gas firms such like the Nigeria Liquefied Natural Gas (NLNG) which sources for its own funding, pays taxes and royalties and also pays dividends to the government from its operations.

Similarly, the corporation said in the monthly report that, it brought in a total of 10,773,726,472.84 litres of petrol and kerosene into the country in 2016 using its crude for product swap programme – the Direct Sales Direct Purchase (DSDP).

It said that under the crude oil for domestic utilisation framework which allows it to take about 445,000 barrels of oil per day, it committed 5.66 million barrels per day (mbd) of oil to the DSDP in February, 2016, 9.49mb in March, 10.44mb in April, 9.89mb in May, 7.57mb in June, 5.69mb in July, and another 5.69mb in August.

It also committed 3.83mb into the scheme in September, 8.58mb in October, and 9.49mb in November, 2016, to bring its total crude oil commitment to the DSDP within the year to 76.38mb.

However, the NNPC and the private oil marketing companies spent a whooping sum of N2 trillion to import 18,812,253,160.59 litres of petrol in 2016, the Petroleum Products Import Statistics of the National Bureau of Statistics (NBS), had shown.
The statistics showed that the N2, 019,611,883,820.93 spent on petrol importation was higher than the figures for the previous years.

The report showed that in 2013, 2014 and 2015, the sum of N264.85 billion, N1.202 trillion and N1.29 trillion were spent in petrol importation, respectively.

Apart from importing petrol, the report also showed that 4.89 billion litres of Automotive Gas Oil (AGO) and 713.79 million litres of Household Kerosene (HHK), valued at N505.8billion and N70.7billion, respectively, were imported into the country in 2016.

According to the report, the 2.02 billion litres of petrol imported in May in 2016 at the cost of N249.88 billion was the highest in the year.

The federal government on May 11, 2016 ended the subsidy regime by increasing the pump price of petrol from N86.50 per litre to N145.