Stanley Nkwazema
30 July 2008
Abuja — The immediate past Group Managing Director of the Nigerian National Petroleum Corporation (NNPC), Engineer Funso Kuplokun yesterday told the House of Representatives Committee investigating the Department of Petroleum Resources (DPR) why the government of President Olusegun Obasanjo guided the technical committee that conducted oil blocks bid rounds.
At yesterday's hearing, it was also revealed that Trancorp did not complete payment for oil block 281 hence could not be given the title.
Kupolokun, who was a Sepcial Assistant to the President on Petroleum Matters, told the committee that all his actions had approval from former President Obasanjo.
"The President gave me jobs descriptions. The Petroleum Act does not include me but the minister can be assisted. The minister then was the President . He appointed me as the Special Assistant to the President. I advise the President and the Presidential Adviser to the President", he said.
"He gave me instructions either verbally or written. There is no instruction that I passed to the DPR that I don't have a valid approval of Mr. President. There was no action that I took that did not have the approval of the President," Kupolokun said.
He said he "did not rely on the rankings done by the DPR to award the blocks. In Block 214 where Chevron won, the same Chevron won in block 250. If they won these and Esso Exploration had not won any , we rather spread it out. If one person won three blocks, he may not have money to develop the fields. We did not put in the guidelines and the guidelines are guided".
In view of the foregoing, Kupolokun said he stood by his actions.
" I stand by the actions that we have taken and I stand by it that what we did was in good faith. The taste of the pudding is also in the eating. I am not aware that any operator complained about the operations"
The committee also explained to him that while most of the operators complained to the committee, they may not come out openly and give their own side of the story.
Kupolokun, however, stated that "I heard that Chukwueke said that the 2005 bid round was more competitive. I commend their courage when they said that Nigerians should be allowed to be part of it. It is something that we should encourage .We did only 10 blocks in 2000 and $715 million was realised".
At this stage a retired DPR Director, Mr Peter Achebe, interjected saying that "22 blocks were on offer and we did disqualify some applicants during the offer".
On the draw backs associated with most of the bid rounds conducted by the DPR, he said that "still talking on draw backs, we put a block for NPDC and I was there with them and we posted a price that was higher on OPL135. But when they evaluated a number of wells to be drilled, it was not up to that much. There are areas of improvement and there are areas that we need to improve also".
On the upfront payments collected by the DPR before the awards, Kupolokun said that "what we did was to say we worked in it so that money in real terms comes to a threshold of the profit we have given. On the average all of them were 35% upfront".
When the committee disclosed that the money on the 2000 bid rounds have not been located, Kupolokun said that "collection of the money is a DPR affair. After the bid rounds the PSC agreements were being negotiated. Virtually all the Companies did pay but a few did not. I am not in charge of collecting the money so I could not say it"
On another controversial block OPL 250 where the minimum amount was placed at $200 million, Kupolokun also stated that "SNEPCO won the bid and negotiation started and everybody was asked to pay 35% of the signature bonus". But NNPC officlas present at the hearing clarified the issue that the signing was done in November 2001 but it had been terminated because after drilling they were not successful."
Again the DPR Accountant stated that only $75 million has been paid up to date. Kupolokun explained that "all of the payments were staggered and they all have Presidential Approval. I don't want to disagree with the chairman. When somebody is going for a bid he will factor what he will pay and if he is staggering it, he will put down a huge amount of money first. The issue of staggering came after a protracted negotiation . It was a decision that put economic factors into consideration. The block was back in the basket. Let's take it this way. This is exactly what happened."
But the House Chairman said that "from our own analysis in the year 2000 only $5 million was collected and in four years since that round only $222 million had been collected out of the $628 expected. Taking into cognisance that OPL 250 that had been stopped, Nigeria still had an outstanding debt of $406 million yet to be paid in 2008".
The Committee reminded Kupolokun that his action caused Nigeria to lose $125 million after he agreed that the payment should be staggered and allowed SNEPCO to pay only 35 per cent . We are still losing $228 million from that bid.
The Committee also stated that "On OPL 256, we were told that two names, Ocean Energy and Statoil were included by you as the Special Assistant in 2001".
The committee also said "if you look at the companies that participated in the bid rounds came from above . It shows that top government functionaries had interest in the blocks. You can not use your privilege to compete for the blocks because of your positions to ensure that some of the interests of the companies are well protected.
On his opinion on why the downstream projects had not started and Block 281allegedly used to pay for the acquisition of NITEL even when it had not paid for the signature bonus, he said that "I am not going to pay for Transcorp. They have no title on that block. They have made a partial payment and so we have not issued them a title. We carried out a review in which we pointed out to the minister that we had only a partial payment. The downstream project was a Green Field Refinery in Lekki and I am not sure that they have not executed any one as far as I'm concerned."
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