Kasim Sumaina in Abuja
The Nigerian National Petroleum Corporation (NNPC) is soon to introduce a new model, tagged the Incorporated Joint Venture (IJV), to ease the funding of joint venture projects that have suffered delays due to financial hitches.
Former NNPC Group Managing Director (GMD), Dr. Maikanti Baru, told a panel session at the ongoing Nigeria Oil and Gas (NOG) summit in Abuja that under the new model, ventures would operate as independent entities to enable them to raise capital either through equity or debt and then pay dividends to shareholders.
The new model would be a departure from the extant regime whereby joint venture partners first cover costs and issue cash calls to NNPC for its share.
A statement Thursday by the corporation’s Group General Manager, Group Public Affairs Division, Mr. Ndu Ughamadu, quoted Baru as saying that a consideration for the IJV model was borne out of the need to encourage healthy business culture and growth in the energy sector.
Baru, who was represented by NNPC Chief Operating Officer, Bello Rabiu, said the IJV model, when implemented, would make oil and gas business more productive and beneficial to investors.
He said the current alternative funding arrangement was a temporary measure, adding that the objective of the IJV model was to create a robust business system that allows for projects self-financing and guarantees a win-win situation for all stakeholders.
“The only option which is the same everywhere in the world is for any project or any business to fund itself and the only way it can fund itself is for the business to see itself as both funded by equity and debt.
“The incorporation element of IJV allows it to operate as an independent entity that can source capital to fund its projects and deliver dividends to shareholders at the end of each financial year,” he said.
In response to a question on the apparent lack of trust between the government and international oil companies (IOCs), Baru said the trust level on both sides had improved since 2015.
According to him, prompt payment of cash call arrears and other measures initiated by the corporation contributed in restoring the confidence of the IOCs.
Baru stated that the corporation was paying more attention to gas development due to its potentials to service the energy needs of Nigerians and revive moribund factories in the country.
He said contrary to the current ugly trend of fuel importation, the corporation had developed strategies to produce gas in-country in sufficient quantity for both local and export markets.
According to him, proper gas development and utilisation could generate more Gross Domestic Product (GDP) to the country far beyond what the oil contributes to the country’s economy.
Meanwhile, the National Assembly has said it will give priority to the passage of the Petroleum Industry Governance Bill (PIGB) to consolidate and reposition the oil and gas industry for the benefit of all Nigerians.
Speaker, House of Representatives, Hon. Femi Gbajabiamila, made this commitment during a visit by Baru to introduce his successor, Mr. Mele Kyari, to the speaker.
Ughamadu, in another statement yesterday, quoted Gbajabiamila as pledging to get the National Assembly to work further on the bill to give it speedy passage.
The speaker also commended Baru for stabilising the oil and gas industry during his tenure.
He also described Kyari as a highly respected industry professional whose reputation precedes his name.
Earlier, Baru had congratulated the speaker on his election, describing him as the best person to take the House of Representatives to the next level.
He said NNPC, even after his tenure, would remain focused on delivering dividends of democracy to Nigerians and sustain constructive engagement with the National Assembly and other critical stakeholders.