NNPC’s N1trn JV Debt Shrinks FG’s Revenue

The failure of the Nigerian National Petroleum Corporation (NNPC) to, over the years, fund its N1 trillion ($5 billion) share in the Joint Ventures (JVs) with international oil companies (IOCs) has slashed the Federal Government’s royalty and taxes from oil.

Managing Director of Oilserv, Mr. Emeka Okwuosa, disclosed this to New Telegraph in Houston, Texas, United States of America. He said that the loss of taxes and royalty running into hundreds of millions of dollars by government was due to the continuous fall in the reserves and productions from JV operations. Government’s inability to play its own role in the JV funding, he said, is already eating deep into what government takes as tax from joint ventures.

He said: Until we change our ways on JV funding obligations, the tax and royalty returns will continue to dwindle.

This is even outside the continuous fall in the reserves and productions from JV operations.

“This is because government’s inability to play its own role in the JV funding is eating deep into what government takes as tax.” The development had drastically reduced Nigeria’s crude production from JV from 2.1 million barrels to 1.2 million barrels per day.

Okwuosa said that the over 200,000 barrels of crude production per day from indigenous firms are also at the risk of decline. “The fund has not been made available to us,” he said, adding: “When I say us, I mean the service providers and other indigenous firms.”

The purpose of that fund, Okwuosa said, is “very clear-for capacity building. How the fund is being disbursed today is not clear to any of us.”

He said: “Until we come together to know how this fund is being deployed to build capacity for the nation. We have to make sure that the funds rob off on the economy of this nation, part of which is to provide jobs through the Nigerian participation in the production of oil and gas and that is a major ingredient.

For me, I don’t see how the fund is being deployed to meet this set aim.” On the Nigeria Content Development and Monitoring Board (NCDMB) Act, the Oil Serv boss said: “It is still at the early stage-four to five years, in terms of practice. If it is not yielding the desired result, take it off.

The NCDMB should manage the situation in a way that it meets the motive for which it was set up.” Prodded about the board’s statement that it once said that some local firms had accessed the funds, Okwuosa said: “It is like saying a million dollar of funds and somebody accessed a cent of it. No or very few firms we heard have accessed it and this has little or no effect.