Nigeria's state oil firm to change payment structure for joint ventures

LAGOS, July 4 (Reuters) - Nigeria's NNPC said on Thursday it
was planning to change the way energy joint ventures paid
operating costs to help ensure smooth financing for projects
that have often struggled to secure timely contributions from
the state-run oil firm.
The new "incorporated joint venture" model would allow the
ventures to operate as independent entities, so they could raise
capital through equity or debt and then pay dividends to
shareholders, NNPC said in its statement.
Under the current structure, energy firms operating the
ventures cover costs and issue cash calls to NNPC for its share.
The state-run company, which is responsible for oil
production that provides the bulk of government revenues, has
rarely paid on time and faced an even bigger challenge after the
2014 oil price slump, which led to a sharp rise in its arrears.
Those arrears are being paid off with surplus oil output.
But outgoing NNPC head Maikanti Baru said this payment
arrangement was only a temporary measure. NNPC did not give details about the new structure or say
when it would be introduced, but the model could take the burden
of regular payments away from NNPC and the government.
NNPC has already announced plans to slash its stakes in the
joint ventures to less than 40% this year from between 55% and
60% in a bid by the government to raise revenues. Its partners include Royal Dutch Shell RDSa.L , Chevron
CVX.N and ExxonMobil XOM.N .
Reforming any part of NNPC poses political challenges in
Nigeria. NNPC previously launched plans https://uk.reuters.com/article/nigeria-oil/exclusive-nigeria-revamps-oil-exploration-firms-in-first-step-to-reform-idUKL8N12930Z20151014
to change the funding structure of ventures but this was
introduced on a trial basis and was not widely implemented.