FG And JV Cash Call Debts

The Federal Government, penultimate Tuesday, relieved  tension in the oil sector when it announced the release of $400 million as part payment to settle the outstanding $1.2 billion Joint Venture cash call debts owed multi-national companies in Nigeria, in 2016.
The debt is aside the discounted $5.1 billion cash call arrears being owed by the Federal Government for a period of 10 years.
Exchanging views with journalists on the sidelines of the 2017 Offshore Technology Conference in Houston, Texas, USA, recently, Minister of State for Petroleum Resources, Dr Ibe Kachikwu, explained that the $400 million released to the multi-national companies was not part of a discounted $5.1 billion  cash call arrears the Federal Government negotiated with the International Oil Companies (IOCs), last December.
The Minister also disclosed that a monthly payment plan of $70 million has been worked out with the Central Bank of Nigeria (CBN) to offset the $1.2 billion in 12 months, and named the benefitting IOCs to include  Shell Petroleum Development Company (SPDC), Nigerian Agip Oil Company, Chevron Nigeria Limited, Exxon Mobil and Total ExP.
The Tide finds the development very commendable as it does not only redeem the image of the Federal Government towards safeguarding oil business in Nigeria, but also boosts the confidence of the Joint Venture (JV) partners and generally re-energise and re-galvanise the oil industry in the country.
We recall that heightened destructive activities of militants in the Niger Delta region had, since February 2016, accounted for a drastic decline in the production of crude from the oil fields. The situation, coupled with falling oil price in the international market, had not only impacted the oil sector negatively, but also nearly brought our oil – dependent economy to its knees.
While the Federal Government cannot take credit for the rise in the price of oil in the market, we acknowledge that a number of measures recently taken by the government has achieved relative calm and stability in the volatile region and has translated into much improved production.
We applaud the move by the Federal Government to defray the backlog of cash call debts to the JV partners. The move is an incentive that would encourage the IOCs to further invest in the development of the sector by embarking on fresh exploration work and possibly discover new oil fields.
The Federal Government’s inability to clear the arrears of the discounted $5.1 billion cash call was seen as a major obstacle towards achieving 40 billion barrels oil reserves by 2020. However, with the  measure taken to settle the debt, we can say that the coast is clear for the government to realize its target and set the industry on the path of sustainable development.
The Tide is convinced that the political will exercised so far by the Federal Government concerning the cash calls to the JV partners has positive implications beyond the immediate oil sector. It is an established fact that a major cause of the hostilities and restiveness in the Niger Delta stems from the inability of the oil companies operating in the region to impact positively on their host communities. Most of the IOCs have often pleaded paucity of funds as an overriding reason for reneging on their corporate social responsibility and their inability to faithfully execute their Memorandum of Understanding (MOUs) with their host communities.
With this positive development from the Federal Government, however, The Tide hopes that the Niger Delta will experience a new lease of life as the no love-lost relationship between the oil giants and their host communities in the region will turn around for the better.
We sincerely hope that the gesture of the government will not only translate into the strengthening and expansion of the economy of the country at large, but will also mean a more peaceful, stable and sustainable socio-economic growth for the people that have been mostly impacted by the unwholesome activities of the IOCs.
In concrete terms, particularly for the Niger Delta region, we hope to see more responsible and responsive IOCs that will take keen interest in resuscitation of abandoned projects, payment of contractors and provision of gainful employment opportunities for the teeming and restive youths, among others.
We, therefore, urge the Federal Government not to renege on its commitment to the JV partners and also keep faith with its responsibility to the people. Meanwhile, we exhort the IOCs to be more responsible and responsive in their interface with their host communities, while we also implore the people of the oil-bearing communities to always exhibit maturity and maintain a peaceful disposition towards the IOCs and other investors operating in their domains.