Nigeria and India have entered a $ 15 billion deal swapping oil for cash. The deal was negotiated on behalf of the federal government with the Indian government by the Minister of State for Petroleum Resources, Dr. Ibe Kachikwu.
The Revenue Mobilisation Allocation and Fiscal Commission (RMAFC) has thrown its weight behind the $ 15 billion deal swapping oil for cash. The deal was negotiated in a bid to shore up the country’s foreign reserves.
Under the terms of the agreement, the Indian Government is expected to make an upfront payment for crude oil purchase to Nigeria. The cash is to be repaid on the basis of firm Term Crude Contracts over some years. By this, Indian public sector companies would collaborate in refining as well as exploration and production.
Also, the deal includes long-term contracts for the supply of crude oil to Indian PSU companies from Nigeria. There are also possibilities of executing CGD and LPG infrastructure projects by Indian PSU companies in Nigeria.
The RMFAC in a statement supporting the deal stated that the deal would bring good returns for the economy. Spokesman for the commission, Mr. Ibrahim Mohammed, stated made this known on Tuesday.
Mohammed stated that the commission had always been advocating that the country looks elsewhere, instead of selling off its strategic assets to solve its short-term expenditure requirements.
He believes that long-term investments like this would bring good returns for the economy through employment generation, wealth creation, and sustainable development.
According to the statement:
“In order to arrest the high incidence of gas flaring and harness the huge potential in the gas sub-sector in Nigeria which ranks seventh in the world and first in Africa with natural gas reserves base totalling 188 trillion cubic feet (Tcf) as at May 1, 2015, wealthy Nigerians and foreign investors should be encouraged to set up several LNG projects as possible.
“There is no reason why the country should not have 4 to10 LNG projects which would add value to production, create employment, enhance economic development and subsequently increase revenue generation for the federation.
“In this regard, RMAFC commended Dangote Industries Limited (DIL) on the recent acquisition of Twister B.V., a Dutch company headquartered in the Netherlands delivering reliable, high-yield and robust solutions in natural gas processing and separation to the upstream and midstream oil and gas sectors.”