PHOTO: New Cash Call Policy to give Nigeria more revenue up to the tune of $2 billion (N61billion)- Ibe Kachikwu

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According to the minister of state for Petroleum, Ibe Kachikwu, Nigeria with her new Cash Call Policy with the IOCs in the Oil and Gas sector, is set to earn more revenue from the agreements, and fight any further surprises in the price of crude in the international market..

 The agreement which terminates Joint Venture Cash Call agreements, is sets to bring more clarity and continuity to the management of the main revenue source of the country, and this should be celebrated by Nigerians...said the Minister....
On the new move by the Federal government on this policy, he said:

 “It is part of new measures and strategies aimed at eliminating the burden of Joint Venture Cash Call arrears and securing future funding for the Upstream Petroleum Sector. 


These strategies which are fully supported by the National Economic Council, NEC, will lead to an increase in national production from the current 2.2mbpd to 2.5mbpd by 2019, as well as reduction in Unit Technical Costs from $27.96/barrel oil equivalent (boe) to $18/boe.

“The net payments to the Federation Account is expected to double from about $7 billion to over $14 billion by 2020 and the immediate effect of the new cash call policy will increase net FGN Revenue per annum by about $2billion,” he said.

He further explained that the old system never met expectations of the government, and that this new system will guarantee adequate and timily payments from the IOCs...He said:

“At $42.5 per barrel Oil price which the 2017 budget is predicated on and $24 per barrel fiscal cost recovery proposed for 2017 in FGN Medium Term Expenditure Framework (MTEF) recently submitted to NASS, over $13 per barrel will accrue to government as royalties and taxes from Joint Venture oil and gas production apart from $2.8 per barrel estimated as Government share of profit, at 57 percent equity.

“This will restore investors’ confidence and achieve accelerated production growth in the Joint Ventures. New governance processes will also be introduced. “As a result of the agreement, the IOCs which have agreed to be paid their accumulated arrears up to December 2015, payable over the period of about five years. Payments are expected to be made through incremental production from each JV.”

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