Reps to probe alleged loss of $60bn in NNPCL Joint Venture Operations

The House of Representatives has resolved to probe the alleged $60 billion revenue losses due to inflated cash calls by Nigerian National Petroleum Corporation Limited (NNPCL) Joint Venture agreements.

The resolution to launch the probe was a sequel to a motion moved by Chike Okafor (APC, Imo) on Wednesday during plenary.

Moving the motion, Mr Okafor said the money was lost in the execution of the joint venture agreement between NNPC Limited and other private oil companies.

Cash calls are sent by joint venture operators to non-operating partners for payment in the light of anticipated future capital, operating expenditures or the need for additional capital contributions.

Leading the debate, Mr Okafor stated that private oil companies are inflating their cash call in the course of the execution of the JV agreements.

Explaining the status of the JVs to his colleagues, Mr Okafor said the federal government owns 60 per cent of the oil assets under the JV arrangements.

“NNPCL, as representatives of the federal government and federation have about 60 per cent holding while other partners have the remaining 40 per cent.

“The joint ventures operate under a ‘Joint Operating Agreement’ that spells out the responsibilities of each of the partners in the ventures,” he said.

Mr Okafor claimed that NNPCL Upstream Investment Management Services (NUIMS) has not been efficient in its negotiation of the cash call.

“Due to bloated cash call costs, the NNPCL Upstream Investment Management Services (NUIMS); a unit under the NNPCL in charge of negotiation of costs (both Capex and Opex) have caused huge losses in the neighbourhood of $60 billion.

“The activities of NUIMS have resulted in huge revenue losses, fiscal deficits and an alarming debt profile,” he said.

He, therefore, prayed the House to mandate its Committee on Finance to conduct a comprehensive investigation on all the NNPCL Joint Venture Operations to determine income and cash call costs due to each partner, especially the Federation/Federal Government of Nigeria and whether due process and diligence were observed in the exercise.

The motion was adopted when the presiding officer, Deputy Speaker Ben Kalu, put it to vote.

Mr Kalu described the motion as a straightforward motion that needed no debate and referred it to the finance committee.