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Nigeria loses $565.8m in oil lease fees

The House of Representatives ad hoc committee probing alleged fraud in the allocation of Oil Processing Licenses (OPLs) and Oil Mineral Licenses (OMLs) has declared that the country had lost $565.8million
in revenue owing to the inability of the Department of Petroleum Resources (DPR) to hold oil companies to their commitments to the federal government before the award of the oil licences.
The committee issued the declaration when the DPR described the loss of $565.8m due to non-payment of licencing fees between 2005, 2006 and 2012, however, frowned at the statement made by the Deputy Director of DPR, Mr. Sunday Adebayo Babalola, who in his presentation before the
committee used the term “outstanding payments” in referring to the outstanding payments.
The accused the DPR of conspiracy and sharp practices being perpetrated in the award of oil blocks to companies other than those who bided for and won the licences without any evidence of
disqualification or the right of first refusal by the original winners of the bids.
Querying the DPR whether the award of oil blocks were done in an open competitive bidding manner and the discretionary powers exercised by the minister as well as evidence of advertorial announcing the bidding process for the oil blocks, the DPR informed the committee that every bid round was done transparently and followed due process.
Babalola said: “People behind the companies which got allocated blocks were all unveiled during the technical process before the bidding was done”, adding that oil  blocks won by a company was however, given to another in 2005 and 2006 bid rounds for specific reasons.
The committee therefore, reeled out instances of diversion of OPLs such as OPL 907 and OPL 917 won by VP Energy Limited, but were given to another company as well as other instances.
“In January 2006, the minister of state in a letter to the president said that out of the 44 blocks won in 2005 bid round, payment for 19 blocks had been committed in full, 17 blocks were partial payment and
the remaining blocks were not paid for at all.
“The president ordered the cancellation of the blocks for which part or no payment had been made and were returned to the basket for future bid rounds. However, 21 blocks were awarded as against 19 for which payment were made to government.
“Tenker System were to pay $210million and they paid only $21million which was why the president cancelled their bid. Later, one Sterling Global came and took over the block for just $57million. Who pays the balance to government on the value of the block?”, the committee
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 rejig that would clean up the oil industry.

She said that “we need to rejig our policies as the processes of awarding oil blocks 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 matters which have presented us with so much
banana peels that have hit us with losses.

“We appreciate the effort of the committee in bringing out issues relating to companies carrying out special projects and then reneging,
I want to say that an agreement is an agreement and under no circumstance should an agreement be breached with impunity”, she said.

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