·FEC to consider proposal on payment of cash call arrears
·NNPC: No plan to increase petrol price
Nigeria and China on Tuesday began
to put finishing touches to the multi-billion dollar oil deals both
countries had initiated, and which will see Chinese firms invest heavily
in Nigeria’s energy sector.
But while the terms in the business
deals are being worked out, the firms have indicated that they would be
requesting a sovereign guarantee from the Nigerian government to back
their planned investment on pipeline construction.
To this end, a delegation of Chinese
companies had a meeting with officials of the Nigerian government at the
headquarters of the NNPC in Abuja.
The meeting, where the Memorandum of
Understanding (MoU) for the oil deals was fine-tuned, followed the
inauguration of an inter-ministerial implementation committee on Monday
by the government to meet with the investors.
Present at the meeting yesterday were
members of the committee comprising representatives from NNPC, Ministry
of Finance, the Debt Management Office (DMO), Budget Office of the
Federation, and Ministry of Power, Works and Housing, among others.
A representative of the Chinese
delegation, Julie Zhu, in her presentation, highlighted some of the
investments which the MoU will cover in 2017.
In the upstream sector, Zhu, confirming
THISDAY’s exclusive report yesterday, said the China North Industries
Corporation (NORINCO) would support Nigeria with an oil-backed loan of
$5.5 billion to ramp up upstream oil production.
She said the CINDA consortium – made up
of many leading Chinese state-owned companies – would invest in setting
up one new gas central processing facility (CPF) at a cost that would be
between $3 billion and $3.54 billion.
Zhu also stated that they plan to build a
new petroleum pipeline that would run from Port Harcourt to Kano at the
cost of between $4.3 billion and $5.4 billion.
The Chinese delegation however said
funding for the pipeline would be covered by a sovereign guarantee,
because of the risk of vandalism associated with Nigeria’s petroleum
industry.
“In China, the media coverage of Nigeria
is actually very negative. You have Boko Haram in the north and
militancy in the south keeps coming up. Nobody is going to invest, lay a
pipeline and the next day you bomb it, that is why Nigeria as a
government will need to guarantee they can deal with those issues,” Zhu
said.
She equally explained that the Chinese
companies were proposing to invest in the construction of three power
plants to be located in Abuja, Kaduna and Kano at the cost of between
$3.6 billion and $4.5 billion.
According to her, they will revamp the
country’s four refineries with $0.9 billion and $1.1 billion to get them
working so that they can refine more oil.
Zhu, however, said that after revamping
the refineries, there were plans to add petrochemical units to increase
the profitability of their operations.
All these, Zhu said, would be done at
the same time. “It has to be (done at the same time) because the power
plants cannot work if you don’t have the pipeline. The pipeline will not
work if you can’t process the gas,” she said.
Cash Call Arrears
But as the federal government seeks to
woo Chinese investors to increase their stake in Nigeria’s oil and gas
sector, it remained focused on ensuring that international oil companies
(IOCs) were not left out, with President Muhammadu Buhari assuring them
that the Federal Executive Council (FEC) will soon consider a proposal
to settle the cash call arrears owed the government’s joint venture
partners.
Over the years, the federal government
has found it difficult to fund its share of cash call obligations for
the joint venture oil assets, forcing the IOCs to fund the projects
singlehandedly. The government’s cash call arrears are estimated at $7
billion.
A statement issued by the president’s
media aide, Mr. Garba Shehu, said Buhari spoke at the State House,
Abuja during a meeting with the Director, Global Upstream of Shell, Mr.
Andrew Brown who met with the president yesterday.
The president also said that the
security of oil infrastructure would continue to be prioritised
side-by-side the dialogue with the stakeholder-communities in the Niger
Delta.
He, however, urged oil companies to take
more responsibility in the protection of oil installations to
complement the efforts of Nigerian Navy in the region.
The president also restated the
determination of his administration to restore the country to the “good
old days of accountability”.
Buhari said he would leave a legacy of
improved infrastructure, particularly in the power sector, and also
ensure better security in the Niger Delta region.
“It is only by doing this that investor
morale and confidence will return, and the economy will be positioned on
the path of growth,” the president said.
Buhari, who commended Shell for its
faith in the economy and staying power, assured his guest on some issues
of concern raised by Shell.
In his remarks, Mr. Brown, informed the
president of the resumption of oil exportation from the Forcados
terminal following its restoration.
He called for continued protection by the Nigerian Navy, in view of repeated threats of attack by militants.
Brown commended the anti-corruption
posture of the Buhari administration, as well as the efforts to
streamline and stabilise the economy for long-term projects, saying all
the efforts will go a long way to reinforce Shell’s investment plans in
Nigeria.
No Plan to Increase Fuel Price
Meanwhile, NNPC has said there is no
plan by the federal government to increase the price of petrol from its
current N145 per litre.
NNPC was quick to make this
clarification yesterday after its Group General Manager in charge of the
Crude Oil Marketing Division, Mr. Mele Kyari, admitted on Monday that
the current price was unsustainable due to the prevailing exchange rate.
He also said that under the current
price regime, the subsidy element had crept back, but was categorical
that the Buhari administration would not contemplate another hike in the
price of the product.
Speaking on the issue yesterday, the
Group General Manager, Public Affairs in NNPC, Mallam Garba Deen
Muhammad, restated that there would be no need for the government to
undertake an upward review of the price of petrol, because in its
estimation, there was oversupply of the product in the country.
He also explained that in the wake of
rising prices of crude oil in the international market, it had done
long-term supply deals with suppliers to mitigate whatever price shock
the development might bring on its downstream operations.
Muhammad also disclosed that a new
regime that would allow petroleum marketers have more access to foreign
exchange to aid fuel importation had been negotiated and taken off.
Although he refused to provide more
clarity on the new FX arrangement, he said it was negotiated on the
basis of complaints by the marketers, stressing that the arrangement was
adequate for them.
“The statement was made within the
context of technical terms and not downstream operations. But the bottom
line is that there is absolutely no plan by government to increase fuel
price above the N145 per litre maximum level,” said Muhammad.
He further said: “If there is going to
be anything like that, the agency responsible for fixing price – the
PPPRA – will definitely communicate to Nigerians and give reasons why
that will happen, but as at this moment, there is absolutely no plan to
do that and no need to do that because we have more than enough supply.
“We also have long-term procurement
contracts with our suppliers and the usual reasons that would
necessitate any review of the price at the moment have been well taken
care of. We have long-term contracts and enough stock.”
On the new FX arrangement for marketers,
Muhammad said: “They have been complaining and their complaints have
been addressed adequately to their satisfaction.
“A new window has been opened to make
adequate FX available to them for importation and they are satisfied
with it. In fact, we are waiting for them to now deliver because we have
fulfilled our own part of the bargain.
“Besides, we have a glut in the market,
people have imported and are waiting for off-takers to buy their
products to sell and it is the case in every part of the country.
“Discussions were held, negotiations
were made within the committee that is making FX available to marketers
including the CBN representatives and the marketers.
“The discussion started a few weeks ago
and the window became effective two weeks ago. When people make
complaints, you have to investigate and find solutions to the
complaints.”
When asked if there was a subsidy
element on petrol, Muhammad said: “There is no subsidy in the market
now. What we were explaining is what the price modulation will do, we
said it will make importation of petroleum products easier for everybody
and the need to subsidise will not be there because prices will be
determined by market forces.
“You buy and sell at prices that are
acceptable to you. People sell at prices less than N145, and it is not
magic but diligent pursuit of commonsense, and that is what has been
responsible for the stability and we intend to maintain the momentum.
There has been no shift in policy since the new management of NNPC took
over.”
0 comments:
Post a Comment