NIGERIA loses $565.8 million due to the inability of the Department of Petroleum Resources ,DPR, to hold oil companies to their commitments in agreements, culminating in the award of Oil Prospecting Licences ,OPLs, and OIL Mining Leases, OMLs, the House of Representatives Ad-hoc Committee probing alleged fraud in the allocation of OPLs, OMLs, has said.
The adhoc committee queried the DPR as to why it would tag the loss of $565.8 million due to non-payment of licensing fees, which spanned a period of three different bidding rounds in 2005, 2006 and 2012 and frowned on the use of the term “outstanding payments” as referred to by a Deputy Director of DPR, Mr. Sunday Adebayo Babalola, while making a presentation on behalf of the agency.
It was also discovered that the DPR perpetrated some sharp practices, wherein it awarded oil blocks to companies other than those who bidded for and won the licences without any evidence of disqualification, neither a right of first refusal of the original winners of the bids.
The members also queried why many of the blocks were awarded using open competitive bidding and through discretion by the minister as well as evidence of advertorial announcing the bidding process for the blocks.
Dr. Emmanuel Ibe Kachikwu But the DPR insisted that every bid round followed a transparent and due process.
DPR’s Babalola, however, explained that “People behind the companies which got allocated blocks were all unveiled during the technical process before the bidding was done.”
On blocs won by a company being given to another, he said that happened in 2005 and 2006 bid rounds for specific reasons.
The committee reeled out instances of diversion of OPLs, such as OPL 907, 917, won by VP Energy Limited, but were given to another company.
“On January 20, 2006, the Minister of State in a letter to the President, said of the 44 blocs won in 2005 bid round, payment for 19 blocs had been committed in full; 17 blocs, partial payment, while the remaining blocs were not paid for at all.
“The President ordered cancellation of blocs for which part or no payment had been made and have returned to the basket for future bid rounds. However, 21 blocs were awarded against 19 for which payments were made to government.
“Tenker System was to pay $210 million and they paid only $21 million, which was why the President cancelled their bid. Later, one Sterling Global came and took over the bloc for just $57 million. Who pays the balance to government on the value of the bloc?” the committee queried.
It, therefore, asked for evidence of disqualification of bid winners who could not get oil blocs, their offer of first refusal and participation by those who eventually got the blocs.
However, the Minister of State for Petroleum Resources, Ibe Kachikwu, who was represented at the hearing by the Permanent Secretary in the Ministry, Jemila Shuara, expressed the need for a policy re-jig that would clean up the oil industry.
She said: “We need to re-jig our policies as the processes of awarding oil blocs have been very grey and need to be cleaned up.
“Before your hearing came up, the minister had actually scheduled a meeting with the DPR, the NNPC as well as other stakeholders, with a view to ironing out this matter which has presented us with so much banana peels that have hit us with losses.”