Hector Igbikiowubo
13 January 2009
interview
THE House of Representatives committee on Petroleum last year commenced an investigation of the Nigerian National Petroleum Corporation (NNPC) and its subsidiaries, and the Department of Petroleum Resources (DPR).
In a bid to ascertain the roles played by the actors of the time, those who superintended these agencies of government under the Olusegun Obasanjo administration were invited to assist.
His Royal Majesty, King (Dr) Edmund Maduabebe Daukoru, CON, Mingi XII, Amanyanabo of grand Nembe Kingdom in Bayelsa State and former president of OPEC got a questionnaire. His response is captured and transcribed by Hector Igbikiowubo of the Vanguard newspapers.
What was your full designation as a Minister?
I was not a Minister until January, 2007. From November 2003 to June 2004, I was Presidential Adviser on Petroleum Matters. From June 2005 to January 2007, I was Minister of State for Petroleum Resources. Lastly from January to May 2007. I was Minister for Energy (Petroleum plus Power).
By that designation, were you the Minister recognized by the Petroleum Act 1969 as amended?
No. I was not until January 2007.
If yes, were you the Minister with the powers provided by section 2(1) of the Petroleum Act?
No. I was not the Minister with the powers you refer to under Section 2(1) or the current section 8(1) of the Petroleum Act, L.F.N 2004 Cap.P.10 until January 2007. You will recall that all throughout the former President's tenure, there was clamour for a substantive Minister of Petroleum Resources to be appointed.
That clamour would not have been if I had the Ministerial powers you refer to.
Mr. Anthony Chukwueke while appearing before the Committee answered YES to the following questions: Well, in other words, where in your Guidelines the word 'Minister is used and approval is sought from a Minister, when you were there, that Minister who gave the approval was Dr. Edmond Daukoru, is that the correct assertion? Is Mr. Anthony Chukwueke correct in the answer he gave to that question?
As Director of the Department of Petroleum Resources (DPR), Mr. Anthony Chukwueke reported to me on technical/professional matters and to the Permanent Secretary on administrative matters. I was not the Minister.
I only exercised those responsibilities delegated to me by Mr. President by virtue of Section 12(1) of the Petroleum Act, Cap.P.10 L.F.N. 2004, e.g. leading the Nigerian delegation to OPEC, chairing the Board meetings of NNPC or signing commercial agreement between NNPC and third parties on behalf of Government, subject to Mr. President's prior approval of the overall process leading to such agreements, which makes such signing purely a legal/commercial routine. Specifically, Board decisions were always forwarded to Mr. President for approval. I want to stress that out of respect for the sensitivities of a public mandate, I exercised minimal discretion against what my experience would have entitled
me to in an equivalent private sector position. On the rare occasions where I exercised discretion, it was on matters of which Mr. President was comfortable with the emerging position and he was always subsequently presented with the outcome for approval.
Since the year 2000, Guidelines have been produced for all the bid rounds up to and including the 2007 bid round?
Prior to 2000, acreage allocation was on discretionary basis. With the introduction of competitive bidding in 2000, Guidelines or Regulations provided for by the enabling provisions of section 9(1) & (2) of the Petroleum Act, Cap. P.lO L.F.N 2004 were introduced simply as an information package for prospective bidders.
From the 2005 Bid Round, the first under my tenure, the 2000 Guidelines were revised to comply with the new electronic bidding process that was introduced, as an improvement on the old system. As part of an evolving process, the 2005 Guidelines were further improved in 2006/2007, based on internal lessons learnt, international process audits (by Brazil, Norway and the UK at our request) and global best practice.
What role do these Guidelines serve in the bid process?
Guidelines serve as information package to prospective bidders, as well as to regulate the process. As such they were given wide circulation and clarification through interactive sessions with interested audiences (including the press) both local and international. Since 2005 they were also posted on the website.
Did you strictly adhere to these requirements in assessing companies who ultimately won blocs?
By law and to the extent that the Guidelines have been adequately clarified, they were mandatory not discretionary. However, there were bound to be grey areas in the actual application of the guidelines. These would call for the exercise of sound professionalism, wide knowledge of industry best practice, and of course, a commitment to fair play and national interest.
Can a company participate in the Bid-Round without paying the threshold fees? In other words, did all the companies to whom acreages were 'located in the 2000 to 2007 bid rounds participate in bid process, commencing with the payment of Registration fee, through the payment of signature bonus and concluding with the signing of PSC? There are fees which appear in the Guidelines for participation in the Bid Rounds?
From the 2005 Bid Round to the 2007 Round, which were conducted under my tenure, all participating companies as far as I know paid the appropriate fees.
All applicants to pay flat application fees of $l0,000, while only bidders that were eventually qualified to bid were to pay bid processing and data prying fees before they could bid. Leasing of data and reports were optional. As far as I am able to ascertain, there is no winner that did not pay these fees and the bided signature bonus in full as stipulated. The winner would not sign a Production Sharing Contract (PSC) with NNPC without having scaled the payment milestones.
Why were these sums paid into the Federal Government of Nigeria PTDF Account instead of the Consolidated Revenue Account?
Where the bid proceeds were paid into was directed by the Accountant General of the Federation. We simply complied.
You obtained evidence of the financial strength of companies before they were pre-qualified. How come some companies issued bounced cheques for signature bonus?
The allocation of oil blocks was a process, which was subject to termination at anytime by Government if bidders defaulted. There was therefore no exposure on the part of Government and thus no necessity for DPR to investigate/verify the financial standing of companies across the globe.
How were local content vehicles/partners chosen?
In 2005, the Local Content Vehicles (LCVs) were open to all Nigerian entities, which, after pre-qualification, were publicly to be paraded to qualified bidders on the floor of the bid exercise, to be picked by the winning entities. In the 2006 Mini Round, the bidders were advised in the Guidelines to present their own Local Content Partners.
In the 2007 Bid Round, prospective LCVs were encouraged to source for potential partners on their own, individually or in consorcia. This was a process of progressive disengagement of the official structuring, which was tried out in the 2005 first electronic bid round.
You know the difference between an Oil Prospecting License and an Oil Mining Lease?
Yes.
An Oil Mining Lease is granted to the holder of an Oil Prospecting License who has satisfied the conditions of his OPL and has discovered oil in commercial quantities?
Yes.
You are aware of the Oil Prospecting Licences (Conversion to Oil Mining Lease, etc) Regulations 2004?
Yes.
From your Knowledge of the Oil Industry is it normal for an Oil Mining Lease to be reverted to an Oil prospecting Licence?
If yes, can you please acquaint this Committee with:
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