Human and Environmental Development Agenda (HEDA Resource Center) has chronicled important milestones in the 2020/2021 Marginal Field Licensing Round in Nigeria which allowed the expansion of the space for indigenous participation in the oil and gas industry, among others.
The Chairman of HEDA, Mr Olanrewaju Suraju disclosed at a news conference for the public presentation of its latest publication: “Spotlighting the Oil and Gas: A Review of the 2020/2021 Marginal Fields Bid Licensing Round in Nigeria, on Monday in Lagos.
He said that some of the milestones recorded included, expansion of the space for indigenous participation in the oil and gas industry, and potential for growing proven reserves.
Others included revenue generation to the tune of N200 billion and US$7 million to the federal government.
“Departure from past experiences of award of oil license to portfolio investors who ended up ‘trading’ the papers for a flip.
“Reversal of a sad narrative of perennial scandals about derailment from due process, corruption and conflict of interest (COI) perpetrated by Politically Exposed Persons (PEPs).
“Opening of opportunity for many downstream petroleum companies to make a significant inroad into upstream petroleum development sector.
“Among such winners are A.A. Rano, Ardova Plc, Genesis, Matrix Energy, MRS, NIPCO and Shafa.
“Opportunity for proven reserves growth anchored on near-oil production assets relinquishment by multinationals into the marginal bid pool, thus deepening the confidence for investment and potential for more production outputs, revenue earnings, job creation and local content development,” Suraju said.
In spite of these laudable achievements, the chairman noted that the report had its gaps and challenges.
He listed some of its challenges as the apparent exclusion of civil society which elicited widespread claims of opacity and the unanticipated delays precipitated by the COVID-19 pandemic.
Other challenges , according to him, are the transition from the Department of Petroleum Resources (DPR) to the Nigerian Upstream Petroleum Regulatory Commission (NUPRC) in compliance with institutional and operational provisions in the Petroleum Industry Act (PIA) 2021.
He also listed the resort to instituting a committee to clean up the mess created under the DPR regime, leveraging the Alternative Dispute Resolution Centre (ADRC).
“High fees and levies charged which warranted a drop in the number of shortlisted applications and/or mergers/SPVs formed by companies.
“ Allegations of undue access to insider information by some privileged persons that complemented already available Competent Person Reporting (CPR) and Net Person Value (NPV) reports to reach decisions about whether to top-up a nearly sealed bid to swing awards or simply walk away.
“Arbitrary lumping of strange bedfellows into same SPVs without regard to capacity, competence and previous experience in proposing/awarding share percentages and structure of governance, funding and profit-sharing formula for them.
“Hush-talks’ about official and unofficial payments by bidders, all of which happened only at the level of allegations without any official records/petitions,” Suraju said.
He said that despite taking longer than originally planned time, the report of the 2020/2021 marginal fields bid exercise produced the desired outputs with useful lessons learnt.
Suraju said that Nigeria and its upstream oil regulatory agency NUPRC could actually conduct a bid round without recount to clogs of corruption scandals that had tainted the image of the country thus construing licensing as the weakest link in its oil and gas industry governance.
He said that political interference by the Minister/Minister of State for Petroleum Resources could be mitigated with their undue and overbearing powers of discretion in allocating oil blocks curbed to allow for professional and business-driven interest.
He said that the capacity of NUPRC to mediate and reconcile such disputes and conflicts of equity negotiation, governance structure, funding and profit-sharing formula was no longer in doubt.
He said that blessings arising from the delays caused by unforeseen contingency of late passage and assent to the PIA 2021 are indeed evident.
The chairman said that though it took almost two decades to come after the first bid round held in 2003/2004, the 2020/2021 marginal fields bid licensing round passed the overall test of quality assurance.
He said that the report recommended the following:
“There should be full disclosure of information at all stages of the bid licensing round (BLR) from the very beginning of expression of interest up to the issuance of certificate of award.
“This is to avoid the peddling of real or imagined allegations about happenings of untoward practices by stakeholders, particularly civil society who felt undermined and not carried along the process.
“More specifically, the process should disclose information comprising names of companies that expressed interest for which blocks/fields, names of their owners and amount of money paid.
“It should also show processes scaled through or fell behind, plans for host community development and contract transparency should be prioritized in the process.
The report also recommended need for cross-institutional checks for key public policy and legal provisions such that beneficial ownership and contract transparency are recommended to be held in strict collaboration with civil society.
It said that it was not just enough to claim transparency, it is also necessary for stakeholders to see products as undeniably followed.
The report said that there was need for broader stakeholders’ buy-in and respect for independence of investors/companies to determine who they merge with and with whom they formed SPVs.
It also recommended that the level of equity participation and profit sharing formula should be guaranteed, instead of forcing a merger of strange bedfellows.
The report added that there should be deliberate efforts by NUPRC to promote stakeholders’ collaboration to realise the central goal and objectives of every oil bid licensing round, while they collectively act as a check on one another for the overriding interest of the country’s economic growth and development.
