The Minister of State Petroleum Resources, Dr. Ibe Kachikwu has explained that need to boost government revenue is behind the early renewal of oil block licences that were due in 2020/2021.
Kachikwu told journalists in Abuja on Wednesday shortly after the closing ceremony of the 2019 Nigerian International Petroleum Summit (NIPS) that government is expecting to raise about $2 billion from the licences renewals.
He said so far about $1.5 billion have been raised from renewals for 25 oil blocks, emphasing that the licences were not for fresh oil blocks.
He said: “We projected for the licences renewal probably around two billion dollars; right now, we are at about 1.2 billion dollars, 1.3 billion dollars. I don’t have the total number of the people renewing but I’m aware it should be around 20 to 30 renewals”.
The minister noted that although most of the licences are due for renewal between 2019 and 2020, the ministry decided to start early for some policy reasons.
According to him, the law allows that one can renew licence six months before expiration.
“We decided to start the process early to generate some revenue for government. We also look at the terms under which they are renewed; that is all what we are doing,” he said.
Kachikwu noted that early renewal was necessary for many companies to have opportunity to access money from the banks for investment, saying companies that had less than six months for their licences to expire would never have access to fund in any financial institution.
Speaking earlier at a panel session on ‘Sustainable development and projections for a hydrocarbon fuelled future’, the Executive Secretary of the Nigerian Content Development and Monitoring Board (NCDMB), Engr Simbi Wabote urged oil companies go beyond corporate social responsibility programmes for host communities into corporate social investment programme.
He said the CSI would create economic activities in the region would lead to more jobs for the youth and alleviate poverty in the region.
He also called on indigenous oil producers in the sector to invest into building modular refineries with special focus on other derivatives from refining that would manufacture by-products.