Gas producers kick against JV cash call obligation
Stakeholders in the Nigeria gas sector have emphasised the need for the Federal Government to desist from Joint Venture (JV) funding, which gulped over $3.09 billion in the last one year.
For example, Nigeria’s total export crude oil and gas receipt for the period of September 2015 to August, 2016 stood at $3.21 billion, out of which the $3.09 billion was transferred to JV Cash Call in line with 2015/2016 Approved Budget and the balance of $0.073 billion was paid to Federation Account.
Already, current cash call indebtedness of the Nigeria National Petroleum Corporation (NNPC), JVs, has risen to well over $6 billion.
In a communiqué issued at the end of the just concluded Nigerian Gas Association (NGA) conference in Abuja, the group stated, “the NNPC JV funding continues to constrain rapid development. We support the efforts towards finding alternative funding mechanisms.”
The communiqué, which was signed by NGA President, Dada Thomas, NNPC JV funding continues to constrain rapid development in the country. “We support the efforts towards finding alternative funding mechanisms,” he added.
The stakeholders believe that financing is possible if the right conditions for success such as fixing the gaps in the value chain, avoiding policy summersault, honoring sanctity of contracts, stabilisation of the exchange rate, long-term view of fiscal policies are in place.
According to them, there exists the need for approximately $51 billion in investment in the sector to cover gas exploration, processing, transportation and general infrastructure.
Whilst acknowledging the funding constraints of Government at this time, they agreed that such investments must be Government led.
They stressed the need to establish a gas promotion council that will address investment opportunities in the sector was raised.
The conference said that the Nigerian Content Development Monitoring Board must introduce speed, simplicity and collaboration with the industry whilst focusing on in-country value addition.
It added that local content must become a strategic resource that ceases to be an excuse but one capable of ultimately reducing costs in our sector.
The emphasis, they noted, must shift to developing competent operators that are encouraged to work collaboratively for the industry. There must be strong commitment by all stakeholders to train and build real capacity in the local industry.
It stated: “We acknowledge the first $100 million drawdown of the NCDMB fund in conjunction with the Bank of Industry but require that we expedite more transparent and widely reported draw-downs going forward.