2-IN-1 STORY: Funding Nigerian Oil Cash Calls From Debt Key For Economy; Why Buhari Wants Emergency Economic Powers — Minister

Minister of Finance, Kemi Adeosun

Nigeria must get out of paying so-called cash calls to joint ventures with oil and gas companies to stand a chance of pulling its ailing economy out of recession, Finance Minister Kemi Adeosun said on Friday.

Reuters report continues:

The minister said the Nigerian National Petroleum Corporation (NNPC) had spent ₦110 billion (US$360 million) on cash calls this month, which dwarfed the country's ₦41 billion naira income from oil production over the same period.

NNPC also owes several billion in back debt to oil companies from unpaid cash calls, which oil worker unions say is stalling the creation of jobs and investment.

"We are already working to see how we can get out of the cash calls. And that is very fundamental to the economy," Adeosun told a press conference.

"We are working with the Ministry of Petroleum Resources and NNPC ... that's a long-term plan: To allow those joint ventures to borrow money that they need rather than taking money out of the federation account."

Sub-Saharan Africa's largest economy is trying to boost tax revenues and the non-oil income to fund a record US$30 billion 2016 budget aimed at reviving the West African country that has been hit by lower oil prices.

Adeosun told Reuters in April the government was thinking of forcing the cash calls, which are for international and local joint venture partners, out of budget funding and into so-called modified carrier arrangements.

Modified carry agreements are loans provided by large international oil companies to the NNPC for investing in oil exploration and production projects.

(US$1 = 306.0000 naira)

Why Buhari Wants Emergency Economic Powers — Minister

PREMIUM TIMES reports that the Minister of Finance, Kemi Adeosun, on Friday explained why President Muhammadu Buhari is seeking the National Assembly’s approval for some emergency economic powers.

The minister, who was briefing the media on efforts by the federal government to navigate the country’s economy out of recession, said “unusual times need unusual measures.”

With the economy in recession, analysts say the country can ill-afford the luxury of time in search solutions to bring the economy out of the woods.

Mrs. Adeosun, who said the government was aware of the pain Nigerians were experiencing, said President Buhari was in a hurry to get the economy out of the recession as soon as possible.

“It is a tough time. But, there is hope for Nigerians,” she said. “Government is doing everything to ensure the country comes out in a sustainable way, so we never get back here again by addressing the infrastructure challenges.

“The government has a very credible plan. It’s going to result in an economy not dependent on oil, and not subject to the boom and burst of oil price. When oil price is high, we are happy, and when low we are sad.”

To address the challenge of infrastructure, which the minister identified as the government’s biggest problem, Mrs. Adeosun said the long procurement process must be cut down drastically to speed contract awards.

“The procurement process was put in place for normal times – advertise, give three months, send in bids, evaluate bids and so on and so forth.

“There are some provisions in the procurement process for emergency situations. That emergency process means you would not necessarily have to advertise and wait.

“So, what government is asking for, which is why there is discussion about seeking emergency powers, are some of these things we have to look at now,” she said.

In view of the peculiar situation of the economy and the need to get basic infrastructure in place to drive economic recovery, she said the government could hardly afford advertising for jobs for 12 weeks.

“That’s what government is seeking for. But, we need legislative approval to do so. Given where we are, that’s one thing the National Assembly would happily grant us the ability to do.

“It’s still important we should have open procurement. Open procurement would give the best pricing and the best opportunities to Nigerians who do not know anybody in government.

“What we need is speed. That is why we want the National Assembly to help us with. We don’t have the powers to truncate the law. These are unusual times, which need unusual measures,” the minister said.