Friday, October 13, 2017 7:19 AM / Office of the Vice President
Our attention has been drawn to some misleading reports suggesting that the
Vice President approved certain procurement contracts for the Nigerian National
Petroleum Corporation (NNPC). This is totally false, as the approvals referred
to were actually for financing arrangements in replacement of the traditional
Joint Venture Cash Call obligations.
In the statement of NNPC recently released in response to allegations made by
the Minister of State for Petroleum Resources, reference was made to various
financing arrangements with NNPC’s Joint Venture Partners, which were approved
by the Presidency under the current administration.
There were three such loan financing arrangements made for:
(i) NNPC/Chevron Joint Venture Project
(ii) NNPC/Chevron Accelerated
Upstream Production Project
(iii) NNPC/Shell/Total/Agip Joint Venture
While the first was approved by the President in person, the second and third
were approved by the Vice President as Acting President.
The NNPC Act, Cap. N. 123, Laws of the Federation, (updated to 2010),
authorises the Corporation to borrow such sums as it may require in the
exercise of its functions.
Sub section (2) goes further to specify the only precondition:
“The Corporation shall not, without the approval of the President, borrow any
sum of money whereby the amount in aggregate outstanding on any loan or loans
at any time exceeds such amounts as is for the time being specified by the
Furthermore, subsection (4) provides that
“Where any sum required aforesaid –
a. is to be in currency other than Naira; and
b. is to be borrowed by the Corporation otherwise than temporarily,
the Corporation shall not borrow the sum without the prior approval of the
These financings are purely commercial loans obtained by NNPC and its Joint
Venture partners, mainly from local and foreign banks, to perform their
exploration and production activities. Repayments are also made out of revenues
from the crude oil produced directly by the funded project.
Unfortunately, they are being confused with contracts for goods and services.
The alternative financing arrangements became necessary as inability of
Government to meet its cash call obligations had stalled further investments in
the petroleum sector and reduced the country’s production capacity.