Nigeria no longer has resources to fund oil industry, GOVT laments

17 December 2015, Abuja – The Federal Government, Thursday, stated that the country no longer have the resources to fund the country’s oil and gas industry, and is therefore, considering and developing new models of financing for the industry in the days ahead.

*Oil rig operating on Aje 5 well.

*Oil rig operating on Aje 5 well.

Speaking at a town hall meeting in Abuja, the Minister of State for Petroleum Resources, Mr. Ibe Kachikwu, also stated that in January 2016, the final decision on the fate of the country’s refineries would likely be made, while it had also concluded arrangement to adopt a price modulation mechanism that would see it setting a price ceiling of between N87 and N97 per litre for Premium Motor Spirit, PMS, also known as petrol.

Kachikwu, who doubles as the Group Managing Director of the Nigerian National Petroleum Corporation, NNPC, also disclosed that he has received the Presidency’s approval to commence the final phase of the restructuring of the NNPC, which would see the Corporation unbundled into four components, while about 1,100 of NNPC Headquarters’ staff would be disengaged.

Commenting on the issue of the paucity of funds, Kachikwu said, “Financing is going to be a key component of our goal, because new models of financing would have to emerge. The country does not have the sort of resources to continue to fund the oil industry. As we go upstream, we are going to begin to see a lot of innovative financing mechanism to provide funding for the oil industry.

“My dream, if I achieve it, is that by the end of 2016, we would completely exit cash calls and be able to find our funds one way to help support our business and get a lot more autonomy in terms of running the industry and report, basically, profit to the Federal Government.”

He added that the unbundling process would see the NNPC broken down into four key components, namely: the upstream company, downstream company, the midstream company, which is gas and power marketing, and the refining group holding company.

He further stated that one of the major restructuring efforts would be in making the Headquarter operations cost effective, hence, about more than half of its 2,200 core Headquarter staff would be whittled down, with a lot of the affected staff assigned to the subsidiaries to help make the units more efficient and profitable.

 

 

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