May 2007 Bid Round: Politics Of Revocation Of Oil Bloc LicensesBy Ifeanyi Izeze When the Department of Petroleum Resources (DPR) of the Energy Ministry insisted that the open-competitive bidding process introduced by the Obasanjo Presidency remained the most transparent and surest way of getting foreigners to invest in the nation’s oil and gas sector especially the downstream sector, it was very correct in that assertion. However, the opaque manner in which DPR and the immediate past President conducted the ‘transparent’ awards of oil blocks made a mockery of even the Gen Abacha’s closed door approach to such exercises in the past. Watchers of Nigerian oil industry were not surprised that barely five months from the change of baton at the Presidency, major multinational oil and gas companies operating in Nigeria had sent two separate petitions to the Presidency on the need to revisit the controversial award of about 20 oil blocks during the May 18, 2007 licensing round conducted in the dying days of the administration of Chief Olusegun Obasanjo. Genuine indigenous companies that were dissatisfied with the manner the exercise was conducted had also threatened to sue the Federal Government if it fails to revisit the contentious award of those acreages. Should the federal government revisit the contentious issues that beclouded the May 2007 award of very lucrative offshore oil block licenses? This question has become pertinent following the plethora of controversies that have continued to trail the hurried give-away of the nation’s remaining lucrative offshore acreages. The active (traditional) multinational and serious-minded indigenous operators claimed they shunned the May 2007 licensing exercise after they received privileged information that the very lucrative blocks had been reserved for political loyalists of former President Obasanjo. In one of the petitions sent to President Umaru Yar,Adua, the operators alleged that the ‘Right of First Refusal’ (FOFR) introduced in the licensing round was designed to ensure that only companies belonging to government’s political allies secured the plum blocks rather than stick to the stringent conditions that required an interested entity to make a minimum of $2 billion investment commitment on infrastructures such as rail systems, electricity and construction of refineries. This was a very serious allegation. It could be taken to be mere allegations at least until cogent facts are presented to support such claim. However, in line with the transparency and due process campaign of the Yar’Adua administration, serious attention should be paid to issues raised in the allegation by the traditional multinational operators with a view to restoring the credibility of oil contracts award processes in Nigeria’s oil and gas sector that had been characterized by massive fraud real and imaginary. The federal government should ignore what could be described as arrant nonsense by a section of the privileged new entrants or oil block traders who think they can blackmail Government through their insinuation that “the revocation of these fraudulently acquired licenses would worsen the assessment of Nigeria by international investors.” How can anybody talk of credibility in the international arena when the process that even selected them was fouled from day one? Hear the chanting of one of these overnight front for the funny Asian oil players: “Should these traditional multinational players succeed in getting the government revoke these licenses, it would definitely discourage investors from Asian countries with considerable plans to make good investment in power, rail systems and refineries responsible for high cost of operating business in Nigerian economy as well as increase repatriation of profits by these multinationals that are not willing to invest profits derived from crude oil sales in the construction of refineries and power generation stations in Nigeria.” This was a no sense assertion at its best. These funny Asian overnight oil investors, for whatever reasons, succeeded in manipulating the psychic of the immediate past president with all the lies about railway, independent power projects and overnight transformation of the entire country into paradise and yet they have not erected a single wooden electric pole anywhere in the country. It is time for the real Nigerians to resist these infrastructural development 419ers. They used the same anthem to collect Ajaokuta Steel, Aladja, Itakpe Iron Ore, ALSCON, Eleme Petrochemicals etc., and until today even the closest communities to the sites of these lucrative facilities are still in pitch darkness and abject poverty. Who should Nigerians blame for the lack of political will power by successive unfocused, self and family-serving leaders to compel the foreign multinational oil operators to compulsorily plough back a sizable portion of their profits into the Nigerian economy especially in infrastructural development? In the first instance does the nation even know the actual earnings or profits of these oil firms operating in the country? Our selfish leaders collaborated with these companies to underpay Nigeria. They were more interested in receiving reasonable handouts for their personal and family needs. The truth is that except Nigerians change their mindset, the invading Asian investors may even turn out to be worse than the devil we already know in the western traditional producers as some of these Asians are coming from countries where transparency still remains opaque. It was an outright mischief for certain persons to claim that doing the right thing would worsen the ability of indigenous oil companies to secure foreign technical and financial partners for execution in the oil sector? In the first instance, these overnight oil and gas traders were supposed to even source and secure technical partners and funds even before bidding for any acreage. But because they used our collective oil and gas asserts to play PDP politics, it was okay for them to get the licenses, sign the production sharing contract agreements ever before scouting for serious-minded technical partners even local ones and financiers for exploration and field development. This is absurd and can no longer be acceptable. In actual fact, the international community would even take us more seriously if we insist on following transparent due process in doing things especially in the oil sector. It was actually better not to believe that the Department of Petroleum Resources alleged that “the bulk of the criticism which the agency faced since the introduction of the open competitive bid had come from the traditional players in Nigeria who are not used to open bidding, but are used to government giving them blocks which they sell and make more money for themselves and thereafter pay the government on negotiated bases”. DPR cannot make such assertion. If it did, the director and everybody in the department’s top management should be sacked and arraigned to face the full wrath of the law. This is because it could rightly be said that they collaborated with the rogue traditional operators and thus were full accomplice in such frauds. This is the outright truth. Any person that claims to be patriotic and genuine lover of this country must agree that diversification of the investment portfolio in the nation’s oil and gas sector will ultimately be to the advantage of genuine competition in the sector. However, to advocate a racial or regional character commission to incorporate Asian voodoo investors would amount to trivializing a very serious matter. Rather than look for funny investors from funny arenas to compete with the traditional players in the nation’s oil and gas sector, Nigeria should be looking at proactive ways of compelling these so called traditional players to do what government and the host communities expect them to do. That is if government, in real terms, would want them to do anything at all as the nation’s oil and gas sector has nothing that could be described in the strict sense of it as a policy direction, both upstream and downstream. The federal government should transparently determine companies that failed to comply with due process during the exercise whether Nigerian, Asian or wherever and retrieve all the oil blocks allocated to such traders. IFEANYI IZEZE
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