Nigeria will get $200 million in badly-needed hard currency from oil majors to pay for fuel imports and ease petrol shortages, Minister of State for Petroleum, Dr. Ibe Kachikwu has said. Africa’s top oil producer, which needs to import most of its fuel needs, suffers from hard currency shortages due to a slump in vital oil revenues.
For weeks, motorists have been queuing at petrol stations. Kachikwu said in a video to NNPC staff posted on his Facebook website, that: “For the first time in this country I have been able to convince the upstream companies to provide some FX buffer over the next one year for those who are bringing in products.”
The agreement included Total, and Shell which would work with local fuel importer Conoil and ENI cooperating with Oando, he said. “I had to box my way through the CBN (central bank) to get a bit of (foreign exchange) allocation,” he said, blaming the fuel shortages also on a surge in pipeline attacks interrupting crude flows to refineries.
Last month, Kachikwu, who is also state petroleum minister, said Africa’s top oil producer was in talks with Chevron, Total and ENI to get help revamping its ailing refineries. Kachikwu also said in the video crude flows had been resumed to the Port Harcourt, Warri and Kaduna refineries.
Meanwhile, the Federal Government plans to split the Nigerian National Petroleum Corporation (NNPC) into two to help ease a planned stake sale and wants to sell at least 40 percent of a newly created National Petroleum Company (NPC) in coming years.
This was contained in a draft of a long-awaited Petroleum Industry Bill (PIB). The bill seen by Reuters, according the news agency, envisages the sale of at least 10 per cent of NPC over five years and is targeting 40 percent or more over 10 years, as Africa’s top oil exporter seeks to fix a cash shortage that is hampering investment at NNPC and end graft.
The National Assembly is to start debating within days the amended bill, in the works for a decade and designed to change everything from taxes to environmental rules and revenue sharing, as well as overhauling NNPC. Lawmakers have not previously been able to agree on the 200-page bill, but President Muhammadu Buhari has made its passing a priority as he seeks to overhaul the oil and gas sector, which accounts for 70 per cent of state income. NNPC’s output has been stagnant at around 2 million barrels a day for years as the company struggles with graft, bureaucracy and funding problems.
To accelerate the reform process, the government is breaking up the bill, with the first part dealing with the reform of NNPC, a pet project of President Buhari. “Divestment of shares … may include the sale or transfer of shares to institutional or strategic investors,” the draft read, ac-cording to Reuters, without giving more details.
A sale of at least a 10 per cent stake in NPC is to take place within five years, with the rest to happen within 10 years, the bill says. The previous draft had called for a 30 per cent sale within six years. It gave no reason for the longer timeframe but a source involved in the draft said selling a larger stake was intended to raise more funds and help minimise the risk of corruption, because of the greater influence of outside investors and private firms,” Reuters reported, quoting the source to have added; “bidding is open to international investors.”
Part of Nigeria’s output comes from Joint Ventures (JV) with foreign and local companies in which NNPC holds the majority stake. However, NNPC is always behind on covering its share of costs owing to the slow pace of government approvals, explaining the need for outside funding.