…House Committee says DPR abused oil block award system
02 June 2016, Sweetcrude, Abuja – A former Group Managing Director (GMD) of the Nigerian National Petroleum Corporation (NNPC), Mr Funsho Kupolokun has described the process of awarding Oil Prospecting Licences (OPL) and Oil Mining Leases (OML) as faulty.
Kupolokun, who appeared before the House of Representatives Ad hoc Committee investigating the award of the licences and leases yesterday, in Abuja, noted that the process must be cleaned up if the country intends to get maximum result from it.
In the meantime, Kupolokun, who ran the NNPC during the administration of former President Olusegun Obasanjo, has denied involvement in the award of OMLs and OPLs during his tenure as GMD.
According to him, “The process of 2006 round of bidding was complex, which made us get less than what we could have gotten, especially on strategic projects. We thought what we did was the right thing but there are areas and issues that we now see went wrong.
“Even the competitive bidding where we invited prominent, credible people from all parts of the country, in a bid to make it transparent was still wrong because we see people even in the same room fighting even up till now.
“There is a need to clean up the process and make it transparent and better than the past,” he added.
The Hon. Gideon Gwani-led ad hoc Committee faulted the Department of Petroleum Resources (DPR) for jettisoning due process by awarding some licences and leases far less than approved prices. Also, the committee said documents at its disposal show that DPR abused relinquishment of licence and leases by operating companies.
The committee noted that a 20th January 2006 letter by the then Minister of State (Petroleum Resources), Edmond Daukoru to the then President Olusegun Obasanjo stated that of 44 oil blocks that were won in 2005, 19 were fully paid for, 18 partially committed and 17 attracted no payment.
The then President directed that the 25 that attracted partial and no commitments should be cancelled and listed for next round, the committee said.
The committee disclosed that curiously 13 oil companies made payments after the presidential directive. It also inquired from DPR the source of the approval for two extra licences, in addition to the preferential treatment for some companies over payment for the licence and leases.
The committee cited the official price for a licence put at $210m for a signature bonus which was rejected because the winner could only pay $21m.
The committee asked for the reason for selling the same oil block at 75 percent discount for $57m and accepting $55m for it from another company.
Responding on behalf of DPR, Head, Basinal Assessment and Lease Administration, Sunday Babalola, said due process was not breached in the award of the oil blocks.
He said from the year 2000, awards of oil blocks were done through competitive bidding, especially between 2005 and 2007 .
He also denied that six companies that did not participate in the bidding process were awarded oil blocks.
According to him, the oil blocks were won by a consortium of companies which included the names quoted by the lawmakers.
On relinquishment of licences and leases after expiration, Babalola said the DPR was in negotiation with affected companies, adding that the licenses and leases could not be withdrawn without negotiation due to the investment put in by the affected companies.
He said there were 31 oil blocks due for relinquishment out of which 16 belonged to NNPC that can not be relinquished, as stipulated by law.
“We don’t just cut the leases because they have invested. We are on this for about one and half year now,” he added.