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Investigative hearing reveals shady deals in 2005-2007 oil bid rounds

By on June 3, 2016

The House of Representatives ad hoc committee investigating all oil bid rounds has heard details of shady deals in the tenders for the 2005-2007 bid rounds.

The committee wednesday heard that none of the companies that won the existing OML 109 and OPL 75 bids have relinquished 50 per cent of blocks back to Nigeria after 10 years, as required by law.

Memoranda available to the committee showed how allocations from bid rounds won by certain companies, were awarded to different companies.

It also revealed how allocations were cancelled after the signature bonuses have been paid by the companies that won the bids.

The committee raised eyebrows at the case of Tankers System Engineering Limited which won the bid for OPL 280 in 2006, and was expected to pay a signature bonus of $210 million.

The company paid only $21 million leading to a cancellation allegedly by the President Olusegun Obasanjo for not paying up the full signature bonus. Curiously the same block was later allocated to Sterling Global Company, which did not participate in the bidding round for $57 million.

The Deputy Director, (Basement, Assessment and Lease Administration) of the Department of Petroleum Resources (DPR), Mr. Sunday Babalola, said $1.2 billion was offered as signature bonuses in 2005 with $765 million paid by the companies.

Twenty four of the OPLs and four OMLs have expired, while several of the blocks are caught up in litigation, Babalola disclosed.

Although he could not explain the discrepancies observed by the lawmakers, Babalola insisted due processes were followed in the allocations.

The former Group Managing Director of the Nigerian National Petroleum Corporation (NNPC), Mr. Funsho Kupolokun, admitted that the bid rounds were complicated and called for reforms to ensure transparency.

“The 2005 round was done through competitive bidding involving people from different parts of the country, but because there were so many people paired up together, many of them were fighting each other, so it did not go well,” he said.
Kupolokun decried the situation where the law allows the Minister of Petroleum Resources to allocate oil blocks by discretion.

The Permanent Secretary of the Ministry of Petroleum Resources, Dr. Jamila Suara, described the hearing as timely.
“Yes, the processes have not been very tidy…the matter of insisting that signature bonuses be paid in dollars is better for us, than to take the payment in projects,” she said.

The committee insisted that the Minister of State for Petroleum Resources, Dr. Ibe Kachikwu, and former Minister Edmund Daukoru must appear to provide

 

[ThisDay]