NNPC calls for alternative funding for JV obligations

The Nigerian National Petroleum Corporation (NNPC) has called for alternative financing models for funding its Joint Venture (JV) obligations.

A statement by NNPC spokesman, Ndu Ughamadu, said the Group Managing Director of the Corporation, Dr. Maikanti Baru, made the call while speaking at the 42nd Society of Petroleum Engineers (SPE) Nigerian Annual International Conference & Exhibition (NAICE) in Lagos.

Baru said the corporation’s need to explore alternative financing was “important to the sustenance of the industry” so as to meet government expenditure and strategic focus.

The NNPC helmsman said alternative financing has deepened local banks’ participation in the upstream sub-sector of the industry, noting that with sustainable funding, deep-water Production Sharing – which currently accounts for 41 percent of daily national production – has risen over the years, with over 2000 percent production growth recorded within the last ten years.

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“To turn the wheel of the industry and ensure that funding doesn’t limit our growth, it is important we consider both the traditional and non-traditional funding options,” Baru stated.

He observed that traditionally, Nigeria had raised funds utilising equity or self-funding from cash-flow, commercial debt instrument or partner funding in form of Carry or Modified Carry Arrangement (MCAs).

He identified the non-traditional funding options to include contractor-financing/deferred payment, Pension Funds, Private Equity, Sovereign Wealth Funds, Export Credit Agencies (ECAs) and none-less Islamic/Sharia Finance.

“There is need to sustain the Industry for it to continue to deliver the much needed revenue and provide the springboard for economic diversification. We must therefore keep the goose which lays the golden egg alive,” Baru noted.

 

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