Nigeria lost at least $565.6m (N111.4bn) to alleged irregularities and other questionable practices during the 2005, 2006 and 2007 oil block bidding, an ad hoc committee of the House of Representatives stated in Abuja on Wednesday.
The committee, acting on information it obtained from the Department of Petroleum Resources, noted that some firms that won licences merely made part payments and left the balance unpaid.
The committee, which is chaired by Mr. Gideon Gwani, is investigating Oil Prospecting Licences, Oil Mining Leases and other oil and gas assets granted by the Federal Government.
A member of the committee from Bayelsa State, Mr. Diri Nouye, for instance, queried the decision of the DPR to allow such outstanding payments in breach of regulations and resulting in losses to the government.
“Why was this outstanding allowed? Was it that the blocks were not producing? By the submission of the DPR, it means that for 2005 to 2007, the country lost over $565.6m. This is a monumental loss of revenue,” he said.
The committee also discovered that many firms that actively participated in the bids and won were later short changed, as the blocks were awarded to companies that did not participate in the process.
The committee cited OPLs 917, 226, 227, 280 and 278 as examples.
Speaking specifically on the case of OPL 280, Gwani pointed out how another firm came after the close of proceedings to pay $55m for a block that was originally offered for $210m.
According to him, Tankers Systems Engineering Nigeria actually participated and won the bid for $210m.
However, it reportedly paid only $21m, as a result of which the offer was terminated on January 1, 2006.
Gwani stated, “The President ordered the cancellation of the offer and Sterling Global came and paid $55m to assume ownership.
“The question now is what happened to the balance? How did Sterling Global, which did not participate in the bid, win it and with a generous 75 per cent difference?”
Besides, the committee noticed that most of the awards violated key provisions of the Petroleum Act, especially Sections 1 (42) and 2(3) where it was stated that “the term of an oil mining lease shall not exceed 20 years, but may be renewed in accordance with the Act.”
Gwani also quoted Section 12(1), which states, “Ten years after the grant of an oil mining lease, one-half of the area of the lease shall be relinquished to the basket or the holder can apply for re-allocation of a part or the whole acreage.”
But, lawmakers said these provisions were breached, leaving a situation whereby bid winners held on to the blocks after the expiration of the 10 years without re-negotiating the deals with the government.
However, in a presentation to the committee, the DPR gave several excuses, including claims that litigation stalled efforts to reclaim some of the wells after the expiration of the 10 years.
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