Stakeholders in the oil and gas industry have lauded the efforts of the Federal Government for opting for the non-discretionary, open bid round awards of oil blocks in the proposed Petroleum Industry Bill (PIB), saying previous reforms planned for the oil and gas industry by successful governments failed because the ministers in charge of the industry decided to ignore them as soon they discovered that their powers have been whittled down in the reforms.
This is the major reason while the Petroleum Industry Bill has suffered the kind of setback it has suffered it went through in the last 20 years, some of them said.
According to them, from the time of General Ibrahim Babangida up to the administration of Goodluck Jonathan all the ministers that presided over the oil and gas industry have either tactically shelves or refused to pursue the reform agenda for the industry as soon as they discovered their power would be reduced.
They, therefore, commended the efforts of the current government for including the item in the proposed law which if passed would enhance transparency and increased government revenue.
Discretionary allocations of oil blocks were very prevalent during the military regimes of General Ibrahim Babangida and late General Sani Abacha, the governments were denied the revenues that should have come to them through a competitive bidding round in form of a signature bonus.
If the national assembly decides to pass the bill into law with the item intact, it means the power of the minister of Petroleum Resources would have been reduced by half over such exercise as the commission would now have the responsibility to carry out such duty.
Seye Fadahunsi, a former executive director of Pillar Oil said it is a wonderful development if the government can keep to the tenant of the rules it has laid down for itself.
“This would bring probity to the process. But would it be able to implement and not succumb to pressure when politicians decide to act. It is a wonderful development but would it stand by it”.
Austin Avuru, immediate past managing director and chief executive of Seplat Petroleum Development Company, said inserting nondiscretionary and open bid rounds award in the proposed law would ensure that things are streamed lined with a high level of transparency which is good for the industry and the country.
“A nondiscretionary and open bid rounds would also raise government revenue. Since is in the law, if the government fails to do the necessary things it could be sued,” he said.
George Izomor, managing director and chief executive, MG Vowgas Limited stated that inclusion of the item in the law is a good idea. He said Mele Kyari, group managing director of the Nigerian National Petroleum Corporation (NNPC) has been making efforts to transform the oil and gas industry and that the government should be encouraged for taking such a bold step.
He urged the national assembly not to delay the passage of the bill.
The draft bill says the grant of a petroleum prospecting licence or a petroleum mining lease on a previously appraised area of a petroleum prospecting licence or a surrendered, relinquished, or revoked petroleum mining lease in, under, or upon the territory of Nigeria, shall be by an open, transparent, competitive and non-discriminatory bidding process conducted by the Commission.
The winning bidder shall be determined on the basis of the following bid parameters – (a) a single bid parameter, which shall be based on any one of the following parameters –
(i) a signature bonus to be paid in full prior to the granting of the licence or lease by or on behalf of the winning bidder;
(ii) a royalty interest;
(iii) a profit split or profit oil split;
(iv) a work programme commitment during the initial exploration period; or
(v) any other parameter as may be defined specific to a bid round;
And (b) a combination of the bid parameters, based on a points system assessable by the bidder in such a manner that the bidder with the highest aggregate number of points shall be the winning bidder.
The PIB says that notwithstanding the bidding parameters prescribed, where there is a bilateral or multilateral agreement between Nigeria and another country, the Government may, for strategic purposes and in return for substantive benefits to the nation, direct the Commission to negotiate and award a petroleum prospecting licence or petroleum mining lease to a qualified investor identified in the agreement or treaty.
