Stakeholders in the oil and gas sector say that unless the discretionary powers given the president of Nigeria to award oil acreages in the petroleum laws are reversed, the purported reforms in the oil and gas sector will amount to a charade.
Power to consider oil acreages for award in Nigeria, rests with the Petroleum Minister but the President is empowered to exercise his discretion in their award, with recourse only to his whim, a practice they consider an aberration and strange among oil producing nations.
The issue of discretionary award is at the heart of the present agitation in the Niger Delta, where some of the indigenes have taken to militancy, listing inequitable spread of oil wealth emating from their domain and polution of their land and water resources, among their grievances.
They also claim that the discretionary actions by past presidents of the country have made some Nigerian stupendously rich while those from whose land the resources are gotten, live is abject porverty.
At a panel session on the ethics and transparency for block concession and divestments in the Nigerian oil and gas industry, at the 40th edition of the Society of Petroleum Engineers, Nigeria Annual International Conference & Exhibition (NAICE 2016), held in Lagos, members said this practice threatens licensing rounds objective of bringing investments that will grow reserves and drive future investments.
Panel members also refuted claims by some sections of industry operators that divestments of shares from the IOCs were hurting Nigeria, which necessitated the recent House of Representatives move to revive the Petroleum Industry Bill (PIB).
“The problem is that Nigeria’s bidding round attracts the most irresponsible bidders because the process is not ethical and is not linked to our national purpose,” said Mutiu Sumonu, chairman of Shlumbbeger Nigeria,
Sumonu blamed this on lack of proper due diligence to establish technical and financial competence of a bidder before blocks are awarded. He enjoined regulators to insist on seeing contractual agreements with technical partners from bidders before bids are considered.
“This is why there are so many blocks that are lying fallow,” he said, “If you pay so much money for an asset and you don’t have technical expertise to run it, the value will be lost.”
Maikanti Baru, group managing director of the Nigerian National Petroleum Corporation (NNPC) stated that the NNPC reforms are to ensure it conducts business transparently.
“We intend to entrench professionalism in conducting our business through transparency, accountability and respect for all stakeholders,” Baru said.
In the same vein, Mordeciah Baba Ladan, Executive Director, Department of Petroleum Resources (DPR) traced the history of award of acreages in Nigeria, observing that prior to mid 2000, each government adopted any method it deemed fit to award licenses but that currently, what obtains is a mixture of competitive bidding and discretionary award of licenses.
“The transparency of acreage allocation process can be enhanced by automating the process and strict adherence to applicable guidelines,” he said.
Other panel members however insisted that these guidelines were often misleading, as the regulations from which they draw breath require clarification. The oil industry, they say, is over-legislated, hence regulatory matters are brought into legislation, making the amendment process herculean and creating conflict between laws and regulations.
“Nigeria needs clarity in the law that empowers the minister to allocate oil blocks, clarity as to the applicant’s track record before approvals are given and clarity in the existing fiscal regime,” said Sena Anthony, legal expert and former group general manager, corporate secretariat and legal division of the NNPC.
“The only way to institutionalise ethics and good governance is to go through the law,” said Niyi Ayoola-Daniels, professor of energy law and president, International Institute for Petroleum Energy Law and Policy (IIPELP).
Ayoola-Daniels further said, “A new petroleum legislation that will prevent the minster from discretionary award of licenses is sorely needed,”
Wunmi Iledare, president, Nigerian Association for Energy Economics said that the only way to enthrone transparency and accountability is to make the process open and change the role of government from a meddler to facilitator.
“Perhaps the role of government should be limited to resource development on policies through the act of the National Assembly, and to let an independent and autonomous agency be responsible for it.”
On the issue of the controversy generated by the divestments of oil assets by the IOCs, Iledare said, “Whoever owns the property should be allowed to divest it the way he or she deems fit, but it is still the responsibility of the government to make sure that the people who are buying the assets do not take Nigerians to the cleaners.”
Posted by Janice Johnson (Source: Businessday)
