Calls heightened on the Nigerian government on Wednesday to immediately cancel the Operating Petroleum Licence (OPL) 245 contract agreement with Malabu oil as part of efforts to tackle what has been seen as a heightened level of corruption in the country’s oil industry.
The calls came in Abuja during an anti-corruption situation room on public presentation of an analytical report on OPL 245 Deal by HEDA Resource centre in partnership with Global Witness.
Kayode Oladele, Chairman, House Committee on Financial Crimes decried the scandal trailing the controversial oil licence, saying that the Malabu deal was regrettable and would cost Nigeria up to $10 billion if allowed to run for the thirteen years as slated in the agreement.
Oil industry experts in their investigations have projected loss to the Nigerian economy on account of the deal at variously at $4.5billion, $6 billion, $9.8 billion and $10 billion based on lopsided Production Sharing Agreement (PSA) in the Oil Prospecting License (OPL) 245 granted Malabu Oil in 988 by Federal Government.
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“As you might recollect, this same House of Representatives in February 2014, after two years of investigation of circumstances surrounding the allocation of and subsequent transfer of the bloc, ordered the cancellation of the sale of a lucrative oil bloc OPL 245 to oil firms, in what was considered ‘a shady deal facilitated with the payment of $1.1 billion’ to a former petroleum minister, Dan Etete,” Oladele said.
He recalled that the House approved all nine recommendations ordering the cancellation of the deal, the drafting of a new agreement and the prosecution of officials found wanting.
Also, in November 2016, following from the failure of the Executive arm of government under the previous government to implement the recommendation of the 7th Assembly on the revocation of the licence
that has attracted unprecedented embarrassment to the country, the current 8th Assembly constituted and mandated an Ad-hoc Committee of the House of Representatives to investigate the payment, benefits and
loss to Nigeria in the deal.
He said the decision for a review was also reinforced on the realization that the $1.1billion paid by Shell and Agip for OPL 245 was disguised as payment to the Federal Government, when it is a common knowledge that the only entitlement of the Federal Government in the award of oil bloc is Signature bonus, while the beneficiary of
the award (in this case, Malabu), is entitled to the full value of the bloc ($1.1 billion) if it divests its stake.
While expressing disgust over the new discoveries based on the outcome of the investigations conducted by world-class oil experts into the scandal to tune of $6 billion revenue loss to Nigeria, Oladele observed that the “discovery further confirms the ;position of the Green Chamber, even without an expert analysis of this nature. We have
asserted and maintained that the deal was never in the interest of Nigeria and the Civil Society Organisations (HEDA, Globalwitness, Cornerhouse and re:Common) have vindicated the parliamentarians our position as standing up for the interest of the citizens and our country.
“While litigation is ongoing in Milan, Italy against Shell and ENI over charges of bribery with respect to the deal, there are emerging facts to the effect that correspondences in the domains of Shell and ENI show that the multinational companies were alerted ahead by Nigerian civil servants that the transaction was deceptive and that
the terms contains clauses which ab-initio ought to have rendered the contract inappropriate.
“It is shocking to note, based on your expert analysis report, that information contained in the Resolution Agreement regarding OPL 245 which was signed in April 2011 and the Production Sharing Agreement (PSA) signed between ENI and Shell of 21 February 2012, projected resource output upon which the subsisting agreement was based is
inconsistent with established industry-based standard reserve estimation techniques.
“The new discoveries on the OPL 245, based on your evaluation analysis, further show that ‘the fiscal terms that emerged from the Resolution Agreement of 2011 and the PSA signed between ENI and Shell in 2012 are not consistent with the essence of a normal production sharing system’.
According to him, the controversial terms on OPL 245 compromises Nigeria’s potential revenue from the oil bloc considering that the contract is hugely at variance with terms on which Shell had been awarded licence for the same oil bloc in 2003.
Olanrewaju Suraj, HEDA’s Director, urged President Muhammadu Buhari’s administration to revoke the oil bloc to save the country from the potential huge loss.
He said, “We want a revocation of the contract. Nigeria has gone to court in the UK to say this contract is the product of a corrupt process and the UK Court upheld that submission by the Nigerian Government and on the basis of that the sum of $85m was forfeited in the UK and repatriated to Nigeria by the UK system. That was some of the proceeds that were supposed to go to the middlemen that were left in the UK after the $1.1 bn was paid into the account and it went to some certain individuals.
According to him, “Nigerians established that this is absolutely a corrupt process and you all know you can’t build something unlawful and this is a criminal process, no matter how beautiful the product is you can’t make it sacrosanct.
“Secondly, the constitution in Nigeria as at 1998, when that allocation was done by the former Minister of Petroleum Resources Dan Etete to himself, a sitting Minister, the constitution says you cannot benefit from a process as a public office holder which you superintend and the punishment for that in that constitution is that the Government will recover whatever benefit you get from that.
“It is under the code of conduct for public office holder, everything will be recovered and sent to the Federal government. “That 245 license granted to Malabu in 1998, when Etete was the Minster and was a shareholder in Malabu was a process that is null and void, based on the constitutional provision,” he urged.
In his submission, Okoi Obono-Obla, Buhari’s Special Assistant on Prosecutions, said that the government is currently dealing with the misbehaviours of oil companies in Nigeria.
“Mobil is one of them and we are investigating Mobil over the failure to remit over $1.9 billion to the federation account arising from an oil block by Mobil in 2009. The cost of that oil block was about $2.5 billion and Mobil paid only $600 million. So, we want to recover $1.9 billion that is outstanding.
“We are also investigating a lot of oil companies because of their failure to pay tax. A lot of them don’t pay tax. You can imagine how much they are making and a lot of them don’t pay tax. That is a classical example of lawlessness and causing economic adversity to the country,
“We are happy for hat Global Witness and the Nigerian partners have done and we are going to investigate and recover them.
“We will go after their assets and that is the way to fight corruption. “It is a common knowledge that the entitlement to the Federal Government of Nigeria in the deal was just a signature bonus.
The real beneficiary was Malabu Oil.
“I have the privilege of reading some of the findings and discoveries on the outcome of investigations by oil experts. They estimated the loss at $6 billion, but it is well over $10 billion. So, it will be correct to say that the loss to Nigeria was well over $10 billion.
Presenting the report, Don Hubert of Global Witness particularly noted that contracts that govern Nigeria’s natural resources must be disclosed to the public.
According to him, “Nigeria cannot afford to allow the agreement to remain in place,” he stated.
ONYINYE NWACHUKWU & KEHINDE AKINTOLA, Abuja
