New Payment Model for Joint Ventures:NNPC

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The Nigerian National Petroleum Corporation (NNPC) intend introducing a new model, with the Incorporated Joint Venture (IJV), in order to ease the funding of joint venture projects.

Dr. Maikanti Baru the former NNPC Group Managing Director (GMD), said at the ongoing Nigeria Oil and Gas (NOG) summit in Abuja that “under the new model, ventures would operate as independent entities to enable them to raise capital either through equity or debt and then pay dividends to shareholders”.

The corporation’s Group General Manager, Group Public Affairs Division, Mr. Ndu Ughamadu, quoted Baru as saying that “A consideration for the IJV model was borne out of the need to encourage healthy business culture and growth in the energy sector”.

The NNPC Chief Operating Officer, Bello Rabiu who was representing Baru at the meeting said “The only option which is the same everywhere in the world is for any project or any business to fund itself and the only way it can fund itself is for the business to see itself as both funded by equity and debt”.

“The incorporation element of IJV allows it to operate as an independent entity that can source capital to fund its projects and deliver dividends to shareholders at the end of each financial year,” he said.

In response to a question on the apparent lack of trust between the government and international oil companies (IOCs), Baru said the trust level on both sides had improved since 2015.

Baru stated that “the corporation was paying more attention to gas development due to its potentials to service the energy needs of Nigerians and revive moribund factories in the country”.

According to him, proper gas development and utilisation could generate more Gross Domestic Product (GDP) to the country far beyond what the oil contributes to the country’s economy.

Ughamadu, in another statement yesterday, quoted Gbajabiamila as pledging to get the National Assembly to work further on the bill to give it speedy passage.

The speaker also commended Baru for stabilising the oil and gas industry during his tenure.

Baru said, that even after his tenure, NNPC would remain focused on delivering dividends of democracy to Nigerians and sustain constructive engagement with the National Assembly and other critical stakeholders.

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