JV funding: PENGASSAN charges government on payment of cash call arrears

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Workers in the oil and gas industry have called on the Federal Government to put machinery in place for the payment cash call in the Nigerian National Petroleum Corporation (NNPC) Joint Venture (JV) operations with oil companies, just the same way the government has started settling marketers who imported petroleum products to the country.
Speaking on the government’s inability to fund JV operations and owing oil companies arrears of cash calls, the National Public Relations of Petroleum and Natural Gas Senior Staff Association of Nigeria (PENGASSAN), Comrade Emmanuel Ojugbana, noted that the Joint Venture between the NNPC and oil companies presently accounts for more than 60 per cent of Nigeria’s crude oil production.
Ojugbana said that contributions of the JV operations to the nation’s economy cannot be under emphasized despite increasing production from the Production Sharing Contracts (PSC) fields.
He explained: “The JV structure is an average of 55 per cent for the NNPC and 45 per cent for private oil companies. Unfortunately, despite the fact that NNPC has a larger chunk of the proceeds from the JVs, it has always been defaulting in payment of its own counterpart funding of projects.
“Exploration activity has been greatly recessed by the challenge of funding the operating budget and cash call obligations. Over 50 per cent cut in JV funding and irregular release of Cash Call has made the operators to scale down on the whole spectrum of the E&P operations.”
“Oil companies are owed billions of dollars in cash call arrears putting the jobs of our members and other workers in the industry in jeopardy as companies easily rationalize disengagement of staff and reduction in welfare packages as being due to lack of funds based on outstanding funding arrears.”
He further clarified that the lack of funding of the JV operations in the country’s oil and gas business translates to reduced work programmes by the oil companies which mean reduction in re-investment and on a larger scale revenue to the federation.

“There is depletion in national reserves due to lack of exploration activities, as many fields are yet to be developed by International Oil Companies (IOCs) due to lack of funds, which extrapolate to decrease in what is accruable to the national coffers if we could harness this untapped wealth,” he stated.

The Association’s spokesperson said that if the government can take the bold step to commence payment of debts owed the oil companies due to the inability of the NNPC/government to pay their own counterpart funding of the JV operations, as it decided to be paying the major and independent marketers who import petroleum products into the country, there will be more activities in the oil and gas industry.

“As workers in the industry and Nigerians, we are concerned about this perennial problem and demand that the Government should make funds available to clear cash call arrears owed to oil companies so as to restart stall projects as well as bring in new investments into the sector, which will translate to creation of more jobs in the industry,” he stated.
Ojugbana suggested that once JV work programme and budgets are approved, the government should adhere to it for the duration of the year, adding that there should be no cuts in the JV budget during the year when work programmes are already implemented as it has adverse effect on such JV operations.

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