Oil
Oil sector contracting, licensing processes fraught with corruption-NNRC
LAGOS-The Nigerian Natural Resource Charter (NNRC) has carpeted the process for the award of contracts and licenses for oil and gas prospecting in Nigeria, noting that it is tainted by corruption and collusion.
This is based o the char
ters 2014 benchmarking report which further raises questions about the process which it disclosed is ruined with a high degree of uncertainty and political influence, a factor that has hampered the growth of the sector and the economy in general. The report, presented by the Nigerian Resource Governance Institute, NRGI, the Centre for Public Policy and Advocacy, CPPA among others, summarizes the second benchmarking of Nigeria’s petroleum sector governance against the 12 precepts of the Natural Resource Charter.
The NNRC is led by a 14-member independent, multidisciplinary expert advisory panel, comprising Mr. Odein Ajumogobia, former Minister of Petroleum and Foreign Affairs minister; Mr. Adeola Adenikinju, a Professor of Economics from the University of Ubadan; Mr. Bode Agusto, former Director General of the Budget Office and Professor Akpan Ekpo, Director General, West African Institute for Financial and Economic Management, among others.
The report said, “For instance, where a company is perceived to have the best qualifications, based on the criteria set by, for example, the Department for Petroleum Resources (DPR), such a company may not emerge as the final bid winner. The predictability of the contractual process is significantly diminished as a result.
”The report further highlighted the fact that 67 per cent of marginal fields allocated in the 2003 licensing round are yet to produce a single barrel of oil, 10 years later.Furthermore, it added, “Some licensing activity took place during the 2012-2014 period.
On 28 November 2013, the Federal Government of Nigeria (FGN) through the minister of petroleum announced the opening of second marginal oil field licensing round, with a total of 31 fields on offer – 16 of them located onshore, and the remaining 15 on the continental shelf.
”The report lamented the fact that the preparatory activities and road shows following the announcement of the 2013 marginal fields, did not lead to any allocations as the government chose to repeatedly delay the proceedings and ultimately to postpone the round all together.
The report further stated that sector roles under the Ministry of Petroleum Resources are either not explicitly known or are so fluid that the same function may cut across multiple agencies, giving rise to confusion and conflict of interests.“In monitoring and regulating the industry, for example, the DPR is not effectively independent and empowered to execute its oversight functions.
Its decisions often conflict with the interests of NNPC especially since NNPC is involved in both the regulatory and commercial aspects of the industry. For other companies operating in the industry, regulatory complications and compromises arise from the lack of adequate influence and capacity for the DPR to carry out its duties without bias,” the report noted.
In general, the report disclosed that situation in the Nigerian oil sector did not record any significant change from when the last report was presented, noting that all the indicators used in measuring Nigeria’s performance remained the same.“Since 2012, there has been no progress made with respect to the Petroleum Industry Bill, PIB.
The Bill’s provisions are not in the most ideal form, and it is stalling for a number of reasons including disagreements over its fiscal provisions, especially allegations of being a revenue bill; lack of resolution of challenges of policy discretion; and other regulatory issues with its proposed institutions,” the report stated.Mr. Dauda Garuba, Nigerian Program Coordinator, NRGI, explained that the release of the report will help shape discussions ahead of the 2015 elections, entrench change and accountability in the polity.
According to him, the Charter is designed to see how countries rich in natural resources are managing the resources for the public good.Continuing, he said, “The 2014 benchmarking exercise is not just another index of information; rather, its goal is to help Nigeria improve governance of the oil and gas sector and provide key stakeholders with a tool for action.”
In a strategic move to revitalize Nigeria’s oil and gas sector, the Federal Government has unveiled two key fiscal incentives aimed at attracting investment and enhancing energy security.
The announcement was made by Mr. Wale Edun, the Minister of Finance and Coordinating Minister of the Economy on Wednesday.
The first initiative, the Value Added Tax (VAT) Modification Order 2024, introduces critical exemptions for essential energy products and infrastructure, including Diesel, Feed Gas, Liquefied Petroleum Gas (LPG), Compressed Natural Gas (CNG), Electric Vehicles, Liquefied Natural Gas (LNG) infrastructure, and Clean Cooking Equipment.
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These exemptions are designed to reduce living costs for Nigerians, promote energy security, and accelerate the transition to cleaner energy alternatives.
The second initiative, the Notice of Tax Incentives for Deep Offshore Oil & Gas Production, offers new tax relief options for deep offshore exploration projects.
This measure aims to position Nigeria’s deep offshore basin as a premier destination for international oil and gas investments, boosting the country’s appeal to foreign investors.
These reforms are part of a broader set of policy initiatives, known as Policy Directives 40-42, endorsed by President Bola Ahmed Tinubu.
The directives reflect the administration’s commitment to fostering sustainable development in the energy sector and enhancing Nigeria’s competitive edge in the global oil and gas market.
By Yemie Adeoye
NIGERIA’s President Bola Tinubu has announced that the protracted ExxonMobil-Seplat upstream oil divestment will be formally approved by the Minister of petroleum within a matter of days, just as he announced his government’s intention to expand the Compress natural Gas, CNG buses initiative.
The President who stated this during his Independence day nationwide broadcast stated that the move is in line with his administration’s commitment to free enterprise, free entry and free exit in investments which is the hallmark of his administration investment policy.
“Fellow compatriots, our administration is committed to free enterprise, free entry, and free exit in investments while maintaining the sanctity and efficacy of our regulatory processes. This principle guides the divestment transactions in our upstream petroleum sector, where we are committed to changing the fortune positively. As such, the ExxonMobil Seplat divestment will receive ministerial approval in a matter of days, having been concluded by the regulator, NUPRC, in line with the Petroleum Industry Act, PIA. This was done in the same manner as other qualified divestments approved in the sector.”
The President also seized the opportunity to plead with Nigerians to be patient with his administration’s reform policies. “As your President, I assure you that we are committed to finding sustainable solutions to alleviate the suffering of our citizens. Once again, I plead for your patience as the reforms we are implementing show positive signs, and we are beginning to see light at the end of the tunnel”.
“Our energy transition programme is on course. We are expanding the adoption of the Presidential Initiative on Compressed Natural Gas for mass transit with private sector players. The Federal Government is ready to assist the thirty-six States and FCT in acquiring CNG buses for cheaper public transportation.
Fellow Nigerians, while we are working to stabilise the economy and secure the country, we also seek to foster national unity and build social harmony and cohesion. Our economy can only thrive when there is peace”. he enthused.
As part of the administration’s push to improve Ease of Doing Business (EoDB), Nigeria’s Vice President Kashim Shettima has expressed support for ExxonMobil’s plan to invest $10 billion in the country’s deep-water oil sector.
Speaking on Wednesday, September 25, 2024, during a meeting with ExxonMobil executives at the 79th United Nations General Assembly (UNGA) in New York, Shettima called the investment “a clear testament to the administration’s economic reforms and investor-friendly policies.”
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This announcement follows news that international maritime company DP World intends to develop a multibillion-dollar port project in Nigeria.
Stanley Nkwocha, Senior Special Assistant to the President on Media and Communications, shared the development in a statement on Wednesday. He quoted Shettima as saying: “ExxonMobil’s potential investment aligns with the vision of President Bola Ahmed Tinubu’s administration for a more investment-friendly Nigeria.
We are committed to fostering an environment that supports such transformative projects.”Shettima also discussed the administration’s broader efforts to improve the ease of doing business, highlighting the “Renewed Hope Agenda,” which aims to simplify bureaucratic processes, enhance transparency, and offer fiscal incentives to attract global investors.
“Our administration has taken bold steps to unify the exchange rate, remove fuel subsidies, and implement tax reforms. These measures, though challenging in the short term, are intended to create a stable and predictable business environment in the long term,” he added.
On the oil and gas sector, Shettima mentioned that the government is revising the fiscal framework for deep-water operations to attract investment while ensuring fair returns for the Nigerian people.
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