Nigeria oil blocks: Firms owe $515m in signature bonus – DPR

*Nigeria's House of Representatives.

*Nigeria’s House of Representatives.

…As House committee demands appearance by Diezani, Daukoru

Oscarline Onwuemenyi

03 June 2016, Abuja – The Department of Petroleum Resources (DPR) has disclosed that the country was being owed $515,870,250 in signature bonuses for oil blocks licenses won by 37 oil firms during 2005, 2006 and 2007 bidding rounds respectively.

DPR’s head of basinal assessment and lease administration, Mr. Sunday Babalola, made the disclosure during his presentation to the Ad-hoc Committee of the House of Representatives investigating Oil Prospecting Licences (OPLs) and Oil Mining Leases (OMLs) granted by past administrations.

He told the committee under the chairmanship of Hon. Gideon Gwani that $255,120,000, $155,120,000 and $105,750,250 are outstanding signature bonuses for the same periods respectively.

According to Babalola, in 2005 bid round – 65% indigenous and 35% foreign oil firms participated; in 2006 bid round – 40% indigenous and 60% foreign oil firms participated and in 2007 bid round – 85% indigenous and 15% foreign oil firms took part in the exercise.

But when the Ad-hoc committee demanded to know what the DPR was doing on the outstanding money being owed the Federal Government, Babalola said, “Many times we have written to the government to take action to no avail.”

The committee chairman also queried the rationale behind DPR’s decision to discriminate against the oil firms in the payment of the signature bonuses, demanding to know “why should some people be paying fully and you stagnate the payments of others?”

On the status of oil blocks as at May 31, 2016, the DPR official told the lawmakers that there were 109 OMLs, 75 OPLs and 208 open blocks.

He added that an OML is granted through the conversion of OPL and a relinquishment of 50% lease after 10 years of grant and OML but that some oil firms have refused to give up the 1/2 lease as required by the law.

Babalola was, however, quick to point out that 16 OMLs directly granted to the Nigerian National Petroleum Corporation (NNPC) are exempted from the 50% relinquishment in line with section 20 of the NNPC Act, 1990, adding that three leases’ relinquishment process has been completed, one was granted waiver while 11 leases’ relinquishment process was ongoing.

On critical projects to be invested on by the beneficiary oil firms, the DPR official said: “Unfortunately, none of the strategic projects is on course.”

While on the issue of awarding an OPL to a company other the one that won the bid, Babalola said the DPR has noted the committee’s observations and will make a submission on the matter in seven days.

Meanwhile, earlier during the proceedings, there was a mild drama when the committee sought to know why the Ministry of Petroleum Resources failed to bring two former ministers in the ministry, HRM Edward Daukoru and Mrs. Diezani Alison-Madueke to the hearing.

Responding, the Permanent Secretary of the ministry, who stood in for the minister of state, Dr. Ibe Kachikwu, Mrs. Jamila Shuara, said the ministry was unaware of their whereabouts.

“We don’t have the forwarding addresses of HRM Edward Daukoru and Diezani Alison-Madueke,” she said.

But when countered by a member of the committee, who said apart from Allison-Madueke who is currently outside the country, the other former minister resides in the country, hence it is incumbent on the ministry to produce him, to which Shuara said she had ‘noted’ even as she added that the ministry will re-jig its policies.

For their part, two former GMDs of NNPC present, Mr. Funsho Kupolokun and Andrew Yakubu, also made their separate submissions.

Kupolokun said the committee needed to address the manner of allocation of the oil blocks given the fact that the law allows the minister to go by way of competitive bidding or using discretionary power.

While Yakubu said he was not aware of any marginal field processing under his tenure even as he said that no bidding round took place when he was GMD of the corporation.

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