Minister of State for Petroleum Resources, Dr. Emmanuel Kachikwu on Thursday announced that the Federal Government revenue would be increased by $2 billion, as it exits from the Join Venture Cash call with the International Oil Companies (IOCs). The Minister stated this at the signing ceremony of the Joint Venture Cash Call Exit of the Federal Government and the IOCs.
The Minister, also stated that with the new arrangements of the JV cash call, the net payments to the Federation Account is expected to double from about $7billion to over $14billion by 2020.
The Minister, who spoke in Abuja at the Agreement Signing Ceremony for JVs Cash Call Exit and presentation of 2016 Petroleum Sector Score Card, stated that the need to exit the cash call was long overdue as it was hampering business in the sector.
He said: “The issue was how long was the upstream going to continue to bleed, the Federal Government wasn’t meeting their cash call, and investments were drying up, activities were grinding to a halt and we needed to do something.
“Again, we decided that the time had come to revisit the whole structure and how we fund our upstream sector. I thank the oil majors for their cooperation and they humoured me with some engagement.”
Speaking of the advantage, which the new arrangements offer, the Minister 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 $7billion to over $14billion by 2020 and the immediate effect of the new cash call policy will increase net FGN Revenue per annum by about $2billion.”