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NNPC secures $1.2 bn Alternative Funding Arrangement for 36 Oil Wells

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….Project to Generate Additional $5bn into Federation Account
…Inject 127 MMscfd Gas (equivalent of  400 megawatts) to boost Domestic Power Generation  
In a landmark move designed to supplement the Federal Government’s Cash- Call commitment, the Nigerian National Petroleum Corporation, NNPC has secured a $1.2 billionn multi-year drilling financing package for 36 Offshore/Onshore Oil wells under the NNPC/Chevron Nigeria Limited Joint Venture. 
The funding package which is being financed by a consortium of Nigerian and International lenders is an integral part of the Accelerated Upstream Financing Programme initiated by NNPC to address the perennial challenge experienced by the Federal Government in providing its counter-part funding of  JV upstream activities. 
It also envisaged that the initiative apart from supplementing the Cash-Call commitment would help in the maintenance of current production levels in the short term as well as replacing depleting reserves.  
Breakdown  of the NNPC/ Chevron JV deal which was executed at a signing-ceremony in London over the weekend indicate that the $1.2bn is to be channeled into the development of 23 onshore and 13 offshore wells on OML 49, 90 and 95  in two stages over 2015- 2018. 

Ibe KACHIKWU

Ibe KACHIKWU

     

Stage one comprising 19 wells is projected to deliver 21, 000 barrels of crude oil and condensate per day alongside 120 million standard cubic feet of gas per day, mmscf/d, over 2015 and 2016.
Stage two, comprising 17 wells is projected to yield 20, 000 barrels of crude oil and condensate per day alongside gas production of 7 mmscf/d between 2016 and 2018.  
It is envisaged that both stages of the project would generate $2 to $5 billion of incremental revenue to the Federation account. 
Beyond the contribution to the national treasury, the projected peak incremental gas production of 127 mmscf/d, which is the electricity equivalent of 400 megawatts would help boost the Federal Government’s domestic gas aspirations with expectant positive effect on power supply.    
Speaking at the ceremony, Dr. Ibe Kachikwu, Group Managing Director of the NNPC, described the new alternative funding arrangement as the new contractual model in upstream financing which would serve as a template for future initiative to supplement the Federal Government’s Joint Venture Cash Call commitment.   
While commending the NNPC/ Chevron Joint Finance Team and the Consortium of local and international lenders led by Standard Chartered Bank and UBA for a job well done, the GMD noted that the Corporation will not relent in the renewed effort to restore probity and transparency to the process of generation, collection and remittance of crude oil proceeds.  
“I have always believed that issues of Federation Accounts must be left sacrosanct and not to be toyed with. The Accelerated Upstream Financing Programme  is designed to help us achieve this objective,’’ he said.  
Clay Neff, Managing Director of Chevron Nigeria Limited pledged the readiness of Chevron to work assiduously with the NNPC to meet its set target in the project.  
With the completion of its financing, Project Cheetah stands as the pioneer project under the Accelerated Upstream Financing Programme of the NNPC. The project is operated under the NNPC/CNL JV which is owned on a 60-40 basis in favour of the NNPC. 
The NNPC./CNL Joint Venture is reputed as the 3rd largest producer in Nigeria. Project Cheetah is projected to achieve a peak incremental production of 61 million barrels of oil equivalent per day. 

Business

Nigeria pays US$4.9 billion on petrol subsidy in 2024- NNPCL

It was however noted by Biztellers.com.ng, that although subsidy is back in effect, the main reason for that is the increasingly weak state of the Naira and the country’s extreme dependence on products importation. Also unlike the previous subsidy era, where several oil marketers were getting free subsidy refunds for unverified product importation, this subsidy era is witnessing only one importer, the NNPCL, which in effect is the sole receiver of government subsidies. 

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Yemie ADEOYE

INSPITE of the official position of the Nigerian government that the controversial petrol subsidy is gone for good as announced by the President on assumption of office, the state owned Nigerian National Petroleum Corporation Limited, NNPCL has disclosed that petrol subsidy is still fully operational in Nigeria, although, under a different identity.

Umar Ajiya, Chief Financial Officer at the NNPCL, disclosed that it cost the company a staggering N7.8 trillion (US$4.9) to cover this price gap in the first seven months of 2024.

Rather than simply referring to these claims as subsidies, he stated that the company is merely managing the price difference in petrol imports on behalf of the federation, stressing that this should not be misconstrued as a return to subsidy payments.

This revelation has reignited discussions on whether the NNPC is indirectly offering subsidies, a concept typically defined as selling a product below its cost price.

Documents reviewed by Biztellers.com.ng showed that the term “subsidy” was used extensively in official correspondence between the NNPCL and the presidency, particularly in reference to the “shortfall.”

Recall that President Bola Tinubu reportedly approved NNPC’s request to utilize the 2023 final dividends due to the federation to offset these costs.

However, during a media briefing on Monday about the company’s 2023 audited financial statements, Ajiya refuted claims that the NNPC is involved in any subsidy scheme.

Ajiya further disclosed that the Nigerian government owes the NNPC N7.8 trillion ($4.9 billion) in subsidy-related debts for the period from January to July 2024.

In furtherance of his clarification to the News Agency of Nigeria (NAN), Ajiya insisted that no subsidy payments have been made to any marketer in the last nine years, citing the NNPC’s role as the sole importer of petrol under supply contracts.

He said, “In the last eight to nine years, NNPC Ltd. has not paid anyone a dime as a subsidy; no kobo has been disbursed by NNPC Ltd. in the name of subsidy. No marketer has received any payment from us for subsidy.”

“What has been happening is that we have been importing PMS, which has been landing at a specific cost price, and the government tells us to sell it at half price. So the difference between the landing price and that half price is a shortfall.

“And the deal is between the Federation and NNPC Ltd., to reconcile, sometimes they give us money, so there is no money exchanging hands with any marketer in the name of subsidy.”

Ajiya remained silent on how much of the $4.9 billion could have been remitted to the federation account if the NNPC had not been covering the “shortfall.”

It was however noted by Biztellers.com.ng, that although subsidy is back in effect, the main reason for that is the increasingly weak state of the Naira and the country’s extreme dependence on products importation. Also unlike the previous subsidy era, where several oil marketers were getting free subsidy refunds for unverified product importation, this subsidy era is witnessing only one importer, the NNPCL, which in effect is the sole receiver of government subsidies.

 

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Banking

CBN Denies Currency Devaluation

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CBN Pegs Interest Rate at 14%

 

The Central Bank of Nigeria (CBN) has refuted claims of devaluing the.

 

Earlier reports suggested that the CBN had devalued the Naira, lowering its exchange rate from N631 to the dollar, compared to the previous day’s rate of N461.60 at the Importers and Exporters (I&E) window.

 

However, the Central Bank of Nigeria (CBN) released a statement on Thursday through its Acting Head of Corporate Communications, Dr. Isa Abdulmumin, categorizing the report as false information.

 

In the statement titled ‘CBN Has Not Devalued The Naira’, he said the attention of the apex bank was drawn to the news report by an Abuja based newspaper edition of June 1, 2023, titled “CB Devalues Naira To 630/51”.

 

However, the CBN stated categorically that the news report was replete with outright FALSEHOODS and destabilizing innuendos, ‘reflecting potentially willful ignorance of the said medium as to the workings of the Nigerian Foreign Exchange Market.’

 

“For the avoidance of doubt, the exchange rate at the Investors’ & Exporters (I&E) window traded this morning (June 1, 2023) at N465/USS1 and has been stable around this rate for a while.

 

“The public is hereby advised to ignore the news report by Daily Trust in its entirety, as it is speculative and calculated at causing panic in the market,” the CBN spokesman added.

 

He, therefore, advised media practitioners to verify their facts from the Central Bank of Nigeria before publishing in order not to misinform the public.

 

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Banking

BREAKING: CBN Increases Interest Rate By 0.5%

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CBN Pegs Interest Rate at 14%

 

The interest rate in Nigeria has been raised to 18.5 percent, up by 0.5 percent, from 18 percent where it was pegged in March 2023.

 

The Central Banks of Nigeria’s (CBN) Monetary Policy Committee (MPC) resolved to this effect at its third meeting of 2023 in Abuja, on Wednesday.

 

Governor, CBN, Godwin Emefiele, made the disclosure in the communiqué of the MPC’s meeting,  thereafter.

 

While engaging the media at the end of the two-day meeting, Emefiele, said the committee voted to keep the asymmetric corridor at +100 and -700 basis points around the MPR.

 

In the view of the MPC, rising inflation rate is traceable to the high energy cost and challenges around the supply chain, among others, which lie outside the corridors of the CBN.

 

Emefiele said, “The current trend in price development would continue to be monitored by the bank with greater collaboration with fiscal authority to address the drivers of inflation.”

 

Biztellers reports that the CBN had effected six consecutive interest rate increases, which has seen the rate move from 11.5 percent in March 2022 to 18.5 percent in May 2023.

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