The Nigeria Extractive Industries Transparency Initiative (NEITI) has commended the Federal Government for its decision to terminate cash call payments on Joint Venture Agreements with major international oil companies.
A statement by Dr Orji Ogbonnaya Orji, NEITI’s Director of Communications on Monday in Abuja, disclosed that the move would ease up challenges bedeviling the sector for the past 40 years since the model was introduced.
It stated that NEITI applauded the landmark decision as most timely and a huge relief, given the avoidable huge debt burden that JVC payments had imposed on the nation.
It noted that NEITI independent audit reports on oil sector since the past 10 years alerted the nation that Joint venture Cash Call regime constituted a drainpipe to the country’s scarce oil and gas revenues.
NEITI reports had disclosed that from 2009 to 2013, NNPC made total Cash Call payments of N2.4 trillion.
The statement stated that NNPC made other $16.2 billion Cash Calls obligations for Joint Venture operations in the oil and gas industry.
NEITI also expressed concerns over the lapses in the management of the Cash Call and the wider implications of huge revenue leakages.
“NEITI reports, a breakdown of the Naira components of the payments alone shows that in 2009, the country paid N460.24 billion while Cash Call for 2010 stood at N441.44 billion.
“In 2011, the sum of N416.58 billion was paid, and in 2012, the figure rose to N612.93 billion while in 2013, N492.81 billion was paid as Cash Call to Joint Venture operations.
“Similar breakdown of payments in foreign currency shows that in 2009, $3.73 billion was paid. This marginally increased to $3.78 billion in 2010 while $2.60 billion was spent by the nation on Cash Call in 2011.
“The total Cash call payments for 2012 and 2013 were $3.10 billion and $2.98 billion respectively,” the statement stated.
It added that the decision of the Federal Government to terminate the funding arrangement with major oil companies was therefore a bold step in the right direction.
One immediate benefit, the statement noted, was that it would free the country from complex financial burden and allow the resources to be channeled to other national priorities.
It stated that NEITI was pleased that an important finding and recommendation outlined in its independent audit reports ignored over the years had been implemented as part of the on-going reforms.
The statement added NEITI commended the Minister of State for Petroleum Resources, Dr Ibe Kachikwu and management of NNPC for responding to the remedial issue in NEITI reports in the overall interest of the nation.
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