Lagos — Since the passage of the 2010 budget of N4.608trillion, 13.3 per cent higher than the initial N4.07trillion estimate sent by former President Umaru Yar'adua in November 2009 by the National Assembly, there is uncertainty over the implementation of the budget even as the nation is grappling with deficit estimated at N1.5 trillion, less than nine months to the end of the year.
Predicated on a $67 per barrel of crude oil, up from the initial projection of $57 per barrel and a daily oil production projection of 2.35 million barrels per day, indeed there is confusion over the budget.
Although the Debt Management Board (DMO) has said that about $500 million of the deficit would be financed through raising international bond.
However, with the year rolling to an end, the federal government is desperate, more so as the electioneering campaign time is closing by. The Minister of Petroleum Resources Diezani Alison-Madueke disclosed that by August this year a new oil bid round would be conducted "But we will make sure that it is done right and transparently within the tenet of due process," she said. The fund realized from the oil block sale would be used to augment the budget shortfall.
Since the minister's disclosure, Asian countries have been jumping over each other with promises upon promises all in a bid to get oil blocks. This deceit is not new in oil bid process, expert said. In 2005, 2006 and 2007 Nigerians were witnesses to the intrigues and politics that went with oil blocks allocation at that time, they added.
Nigeria, in its desperate moves to fix all its infrastructural facilities that were in near collapsed state was lured into releasing lucrative oil blocks to Asian national oil companies after bogus promises that they would help it fix them.
It would be recalled that in 2005 bid rounds, the federal government introduced "Right of First Refusal" (RFR) which favoured Asian bidders. Prior to the auction, President Obasanjo had entered into strategic deals with South Korea, Taiwan, China, India and latterly Malaysia offering them lucrative blocks in return for the promise of strategic investments.
Specifically, Taiwan's CPC- was given 2 blocks (OPL 274 and 275 ) for core investment in Port Harcourt refinery and unspecified IPP (power plant), Korean National Oil Company (KNOC) won (OPLs 321 and 323), investment of some $US 6billion on gas pipeline from Ajaokuta to Kano via Abuja with spur to Katsina, 2 integrated gas power stations at Abuja and Kaduna and Construction of the Port Harcourt- Maiduguri railway, Malaysia OMEL won three blocs (OPL 279 , 285 , and 216) gas pipeline from Ajaokuta to Kano via Abuja with spur to Katsina, two integrated gas power stations at Abuja and Kaduna and construction of the Port Harcourt- Maiduguri railway
India's ONGC won two blocks 217 and 218 with plans to build a Greenfield refinery 180,000 bd capacity, build a 2000MW independent power plant and feasibility study for a new east-west railway Lagos to Delta. China's CNPC (China National Petroleum Corporation) won four blocks - 2 in the Niger Delta (OPLs 471 and 298, formerly OML 65) and 2 in the frontier Chad Basin ( OPLs 732 and 721) with plan to become core investor in the Kaduna refinery, construction of double track, standard guage Lagos-Kano railway and construction of an HEP complex at Mambilla (3 gorges project)while Taiwan's CPC, 1 bloc (OPL 219 , renumbered 294 ) in return for an unspecified IPP (independent power plant).
In 2006, though only 19 blocks were on offer for which there were 11 bidding consortia, China's CNPC 4 blocs, India's OMEL was awarded 2 blocks and Taiwan's CPC 2 blocks. Although, Transcorp won three oil blocks with plans to invest N1.5 billion into PortHacourt refinery, a green field refinery in Lagos, the two oil blocks were later recovered from the company due to its failure to pay the bid price of $135 million
In 2007 Petronas (Malaysia) pre-assigned 1 block in return for the promise of a 2.5mton petrochemical project in Delta State; CNOOC (China) 4 blocks in return for a $US2.5billion, Chinese Exim Bank loan for the Lagos/Kano railway upgrade and for the construction of an HEP project at Mambilla; CNPC 1 block as core investor in the Kaduna refinery; ONGC/Mittal (OMEL) 1 block in return for the feasibility study of a new railway ,Lagos-Aba; and KNOC was pre-assigned 4 blocs for a $US2bn loan for the Port Harcourt-Maiduguri railway.
In all, the Asian National Oil Companies (ASOCs) had been offered preferential access to 11 blocks.
Have any of them fulfilled their promises? The answer, observers say is no. Some of the analysts who spoke to Daily Trust believe that based on the antecedents of the Asian countries, Nigeria should not raise its expectations.
Professor Omowumi Iledare is an associate Professor, Energy Economics and Policy Research, Louisiana State University."It would surprise me greatly if the bidding outcome is successful without the passage of the Petroleum Industry Bill. I would rather suggest that the petroleum industry is passed first before bidding for any lease."
He said the budgeting process in Nigeria certainly needs improvement. "There is too much dependency in the oil sector. I do hope the purpose of selling oil blocks now is not just for budget. There is no way to get a market fair value for each oil block if the sole purpose is to generate revenue for now. I would rather suggest that the government delays its revenue earnings from oil block sale till production begins. Signature bonus payment to enhance current revenue should not be the key primary purpose for selling oil block. It would be sacrificing the future for now leading to less effective management of the national petroleum endowment"
On Chinese, Koreans, Indians are likely to be favoured based on the proposed plan by government. He said: "Nigerians should be a better judge. How many refineries have been built or in construction phase since 2006. 2006 and 2007 and what have they done in 2010? These things are not difficult to evaluate," he said.