The Nigerian National Petroleum Corporation, NNPC has disclosed plans to change the way energy joint ventures, (JVs) paid operating costs to help ensure smooth financing for projects that have often struggled to secure timely contributions.
Reuters reported that the corporation said the new incorporated joint venture model would allow the ventures to operate as independent entities, so they could raise capital through equity or debt and then pay dividends to shareholders.
Also, under the current structure, energy firms operating the ventures cover costs and issue cash calls to NNPC for its share. In addition, the NNPC which is responsible for oil production that provides the bulk of government revenues has rarely paid on time and faced an even bigger challenge after the 2014 oil price slump, which led to a sharp rise in its arrears which are being paid off with surplus oil output. However, outgoing NNPC head Maikanti Baru said the payment arrangement was only a temporary measure.
Although, the corporation did not give details about the new structure or when it would be introduced, the model could take the burden or regular payments away from NNPC and the government. Meanwhile, the corporation has already announced plans to slash its stakes in the joint ventures to less than 40% this year from between 55% and 60% in a bid by the government to raise revenues. Also, its partners include Royal Dutch Shell, Chevron and ExxonMobil.