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New rules for joint ventures

LAGOS — 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.


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