OBASANJO’S OIL BLOC LICENSING: SELECTIVE REVOCATION OR TOTAL REVIEW?

Nigeria as a nation has not been very fortunate in having leaders with focused ideas for a turnaround. We have leaders ranging from those who had too much money but never knew what to do with it. Some fought corruption in the day time and in the night seasons corruptly devoured our treasury. And now, we have those who never seem to have a single idea on what to do on anything and have embarked on eternal planning exercise as a good servant leader.

 It is now a village square fact that inspite of the strong rhetoric from the immediate past president, Chief Olusegun Obasanjo on his anti-graft campaign, transparency efforts, especially in the critical oil sector were grossly undermined. Since he reluctantly vacated the presidency last year, every month that passed reveals new fraud scandal with each exposing stronger facts to buttress the accusation that what he preached and even witch-hunted some of his political opponents were direct opposites of what he actually did especially in the Petroleum Ministry and its major parastatal, the Nigerian National Petroleum Corporation (NNPC).

The Federal Government recently announced the of revocation of some oil bloc licenses as a result of alleged breach of the guidelines for the 2007 licensing rounds by the affected companies.

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Three oil blocks were affected including, Oil Prospecting Licenses (OPLs) 226, 2005 and 2006 which were awarded to two Indian companies, Essar Exploration and Production Limited and Sterling Global Resources Limited during the 2007 licensing round held in May 2007.

As reported, the cancellation of the award of the licenses may have stemmed from a recommendation of the Special Investigative Committee set up on July 20, 2007 based on the directive of President Umaru Musa Yar’Adua for a re-examination of the 2007 Licensing Round.

From its findings, the committee recommended that OPLs 2005 and 2006, both located in Oguta, Imo State, be withheld pending when Sterling Global could demonstrate its capability in exploration and exploitation activities, while that of Essar OPL 226 be revoked and signature bonus paid by the company be refunded by the Federal Government.

For the records, Sterling Global, has been operating in Nigeria since 2005 and was awarded two blocks – OPLs 277 and 280 during the 2006 Mini Bid Round. Essar was registered in Mauritius on January 4 2007, just four months before the commercial bid round held in May 2007.

The Permanent Secretary of the Ministry of Energy (Petroleum), Mr Sadiq Mahmood, in a letter, conveyed the federal government’s withdrawal of the award of the oil licenses on the grounds that neither of the firms (Essar and Sterling Global) met the pre-qualification requirements to participate in the 2007 licensing round, nor formally bid for the oil blocs which were awarded them.

It would be recalled that the 2005, 2006 and 2007 licensing rounds were marred by series of allegations ranging from outright fraud to voodoo award of licenses to traders. Some stakeholders complained that some beneficiaries of the federal government’s Right of First Refusal (RoF) policy or rather aberration were companies whose credentials and antecedents were highly questionable. It was also alleged that some of the foreign companies granted privilege were financially distressed and may
not be able to fulfil the terms of such awards.

In addition, some companies were allegedly awarded oil blocs without even participating in any of the bid exercises. The very lucrative oil blocs preferentially allotted in the 2005, 2006 and 2007 licensing rounds were based on the fact that the recipients all agreed to invest in the downstream sector. Some promised to invest in refineries, railways, power, roads and the Nigerian leg of the Trans Saharan Gas Pipeline.

For example, ONGC Mittal Group promised to build a 180bpd refinery, construct the East/West railway, and build 2000mw power generating plant. The investment was supposed to commence immediately after the award. Truth be told, none of the companies that were given oil blocs based on the RoF’s principle of “backward integration” has done anything since they got the offers.

So it was very interesting that the Presidential Investigative committee only announced the revocation of the licences for just three blocs and this came barely few days to the actual commencement of serious business by the House of Representatives Ad Hoc Committee investigating the Nigerian National Petroleum Corporation (NNPC), its strategic business units and the Department of Petroleum Resources (DPR).

It was also very interesting that the DPR had refused or rather is deliberately delaying to provide information on the controversial 2005, 2006 and 2007 licensing exercises as requested by the House of Representatives Adhoc Committee.

As reported, the House Committee had written to the DPR to certify all the documents in court and make available all the papers relating to the bid rounds conducted between 1999 and 2007 especially the 2005, 2006 and 2007 exercises.

The documents/information requested by the House Committee included the guidelines, names of the companies that participated in the bid rounds, reason for non pre-qualification and the list of those that won and were awarded oil blocs, how much was paid and to which accounts the payments were made – all on a bid-by-bid basis.

Why would DPR refuse to provide the detailed information on all licensing rounds conducted between the periods under review? Agreed that some Nigerian banks that allegedly funded the signature bonuses for some awardees may want to start getting their money back, whose business is it that those banks funded opaque ventures? The perception that traditional European and American multinational operators in the nation’s oil sector were responsible for the clamour or rather pressure to reverse whatever was done in the controversial licensing rounds could best be described as a feeble excuse. Of course the traditional operators may be covertly involved in the campaign but should that be enough reason for us to allow myopic selfish interests override our collective national interest?

The allegation was that the traditional western operators were bent on discrediting the Indian, Chinese and Korean firms by making false presentations to the federal government. According to insinuations, “The well-established Western oil companies are known not to be happy about threats posed by the forays being made by the Chinese and Indians into Nigeria’s oil sector.” There is no reason whatsoever for the traditional western oil operators to do that because some of them were part of the conspiracy that defrauded the nation of its lucrative deep offshore oil acreages.

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The question is in the process that selected them and their disabled performance since then. If they are re-certified as technically qualified and competent enough to develop and also fulfil the downstream obligations, so be it.

The House of Representatives Adhoc Committee should not only be helped to look into the matter but carefully watched to ensure that they are not just embarking on a sterile academic adventure for their selfish gains in cash or kind.

There is a serious need to review the 2005, 2006 and 2007 licensing rounds with a view to ascertaining the technical and financial integrity of some of the traders and politicians that were compensated with oil blocs by the immediate past administration. All licenses that were not transparently awarded should be withdrawn and due process followed to protect our national interest.

This is because the current covert activities of the foreign stakeholders (Western and Asian) may not produce the desired results for the nation. There is an obvious misrepresentation of the issues and the facts of the matter by different interest groups and this would not in any way help the nation in its avowed determination to reposition its oil and gas sector, at least, while it grapples with the Niger Delta big questions.

BY: IFEANYI IZEZE
IFEANYI IZEZE IS AN ABUJA-BASED CONSULTANT ON POLITICAL STRATEGY AND GRASSROOT CONSULTANT