ANOTHER day of drama was it yesterday as the House adhoc committee investigating activities in the oil sector disclosed that out of the signature bonus of $628 million expected from the exercise between 2000 and 2004, only $222 million had been remitted to the government coffers. The committee also said that out of $200 million which Shell Nigeria Exploration and Production Company (SNEPCO) was supposed to pay for OPL 250 acquired in 2001, only $75 million had been paid to date.
Addressing the session which had former Group Managing Director (GMD) of the Nigerian National Petroleum Corporation (NNPC), Engr. Funso Kupolokun and former directors of the Department of Petroleum Resources (DPR) in attendance, the chairman of the adhoc committee, Igo Aguma, disclosed that $628 million was expected as proceeds from the sale of oil blocks between 2000 and 2004 but from the available records, only $222 million had been paid into government’s treasury leaving a balance of $406 million. The chairman also said that for the whole of 2000, only $5 million was paid as signature bonus to the account of the Federal Government. “The total money intended to be realized from the bid round was $628 million. From our analysis in 2000, only $5 million was collected as signature bonus. In four years since 2000, only $222 million has been collected out of the $628 million. We still have an outstanding of $248 million to be paid for in 2000,” he said.
The chairman further disclosed that SNEPCO participated in the bid for oil block OPL 450 in year 2000 and was awarded the block for about $200 million but has only paid $75 million since then.
Kupolokun explained that after the company won the oil block, a lot of negotiations dragged on and SNEPCO paid about 35 per cent of the $200 million which was about $75 million “SNEPCO bidded for $200 million. The negotiation went on and on and when we finished, it was agreed that they should pay 35 per cent of the signature bonus. OPL 250 was signed December, 2001,” he said. But the committee said it had taken over eight years and yet the oil block was not revoked. He said there was a presidential approval that the payment be staggered.
The head of legal department in NNPC, Sena Anthony informed the committee that the oil block had been abandoned because the allottee could not drill oil. She stressed that in theory, oil block is given after the negotiation but in practice, it is at the point of payment that the real transfer of ownership takes place.
The committee queried the long process of negotiation only for the bidder to abandon the block stressing that the transaction was unfair to the country. The committee said that the guideline which provides for revocation in the event of failure to pay after 30 days notice ought to have been adhered to.
Kupolokun insisted that the country did not lose anything since the oil block was returned to the basket. “To say that the country lost money, is not true. It should be understood that the block is back in the basket,” he said.
The GMD said that she “2000 bid round was done well and DPR did the evaluation and as far as DPR was concerned, it carried out evaluation and some people won. The Petroleum Act does not include me but it envisages that the minister could be assisted.
“My job title was to advise the president and the presidential adviser.” On whether he had approval from the president, he said, “yes and the adviser asked me to pass it to DPR. Some advice were verbal and some written. There is no instruction I passed to DPR that did not have valid approval.” Asked whether he had approval for 2000 bid round, he said he might not have access to the documents but could try and find out.
Kupolokun said: “I knew that my office was not a creation of the law. I did not give my successor the approval I gave as special Assistant. If I check my archive, I should be able to trace the files,” he said.
The committee asked if Kupolokun relied on DPR for awarding oil blocks, he said “no, I did not. I learnt that they stopped at OPL 214, but Chevron got block 250. What we resolved was that we did not give three or more blocks to anybody. There is no guideline that is not guided. We invited all the parties and said we would not give more than one block to one person. We stood by what we did. If someone won 10, should we give him the 10? The taste of the pudding is in the eating.”
The chairman of the committee also said some witnesses came to him expressing fear to testimony because of their business interest. “Some of them came to me privately to tell me a lot of things saying that they could not give it in the open because they are in business,” he said.
Kupolokun faulted the position of DPR on the bid rounds, saying: “I heard that Tony Chukwueke said the 2005 was not competitive. We were bullish that Nigerians should be allowed to go to the deep water as an improvement. The fact that we brought in Chinese and the Koreans was an improvement. We did only 10 blocks and got $750 million. Only 10 blocks were offered. I went to the bid with a team, we posted a higher price on OPL 135. For anybody to come here and say there is improvement or not, does not arise. Two blocks were not sold at last.”
He further explained the participation of SNEPCO saying: “SNEPCO bided for $200 million. The negotiation went on and on and when we finished, everybody was asked to pay 35 per cent of the signature bonus. The committee said it had taken time and the company was not able to pay. OPL 250 was signed in December 2001. Only $75 million has been paid out of the money.” But Kupolokun said: “The payment was staggered and there was a presidential approval.”
But Sena Anthony said the parties had abandoned the oil block because they could not drill oil. Only $75 million was paid out of the $200 million.
The committee further noted: “The total money intended to be realized from the bid round was $628 million. From our analysis in 2000, only $5 million was collected as signature bonus. In four years since 2000,’ only $222 million has been collected out of the $628 million. We still have an outstanding of $248 million to be paid for 2000.”
But Kupolokun said: “The mistake we made was that we went for the bidding without a ready Productive Sharing Contract (PSC) document. But we improved on the profit and we decided to stagger the signature bonus. We have decided to adhere to the extant PSC agreement.”
The committee however, said the explanation was not satisfactory and it observed: “There must be other extraneous factors. We have lost $125 million from your action. The truth of the matter is that Nigeria is still losing huge sum of money.”
Kupolokun spoke on the relationship with the former president on bid rounds. The presidential adviser and himself, Kupolokun, “made representations to President Obasanjo and he either approved or disapproved.” He faulted the DPR explanation that he wrote to Ocean Energy on OPL 256. “It is a long time, maybe Mac Ofurhie cannot remember what happened. If I tell you that I don’t know what Ofurhie is talking about I would not be right. Ocean Energy came to see the Presidential Adviser after hearing about the licensing round. There was an agreement to give out three blocks. They showed interest in the block and we told them that they were welcome,” he said.
The committee further asked: “You wrote that Federal Government had approved the participation in the bid for just one block, who authorized the approval?” He answered: “I wrote to two companies and asked Ofurhie to inform others.” Asked if they knew by telepathy, he said: “I don’t know how they got to know.”
The committee therefore, reacted: “We want to put it to you that you have an interest in the company.” But Kupolokun said: “I don’t know them, I don’t know their address.” The committee insisted that Kupolokun gave information to the two companies and allowed DPR to communicate other companies that did not win. The committee said it appeared curious that it was only the companies invited by him that won the oil block.
At this point, the committee asked for the number of the companies that took part in the bid, he said he would not know since the feedback did not come to his office but to DPR.
The committee further said that the evaluation done showed that Ocean Energy was not qualified for the job but Kupolokun said: “Everybody knows that Ocean Energy is a deep water player in the world. They have done the job well.
“The interest and ownership of some companies that took part in the 2005 bid round had connection with the powers that be. We have information that you people upstairs used your position to influence the bids. Have you written to other companies directly for the bid?” the committee asked and he replied: “Yes, I must have.”
He then tendered some letters in respect of the bid but the committee found that his letter to Ocean Energy preceded the award of the block to the company.
A former director of DPR, Peter Anichebe said: “There was never a time he passed instruction to us that we neglected. That must be a wrong impression. He was part of upstairs and upstairs is upstairs. He can not deny.”
Anichebe gave his own perspective on the bid round: “The bid round started in 2000. A 10-man committee handled the bidding on July 3, 2000. After the evaluation, submitted the results to Kupolokun on behalf of Rilwanu Lukman who was away in Austria. Months later, in December, we saw the results with instructions to invite the awardees which I did. That was my last action because thereafter, I heard of my retirement on the radio and television, adding that instructions on award came from “upstairs”.
On whether he was receiving instructions from the minister and president, he said: “Whatever transpired between the president and the presidential adviser I would not know.
“The follow-up action on the bid round was not known to me. Whether there was right of First Refusal, there was nothing like that at his time. If the special assistant was sitting in for the presidential adviser, I would be comfortable doing so. I was answerable to the minister but if there was instruction from the minister through the presidential adviser, I acted. Some instructions were verbal while some were written. When the presidential adviser says the president had approved of anything, I took it to come from the president. We assumed that any instruction coming from Lukman must be coming from the president and minister of petroleum. Such verbal instructions came directly to me when I was invited to Abuja.
When we were evaluating the bid round, he came and sought explanation and I had to come to Abuja here. He did not give me instructions concerning the 2000 bid round. There was never any interference from upstairs when we were doing our evaluation. I was aware of the bid results but what we did in the evaluation of the bids was to rank the companies according the guidelines. I was not part of the decision upstairs but the results came and we were asked to call the bidders.”
The committee said in the award of some oil blocks in 2000, some anomalies were noticed adding that some companies came first and were placed last and frustrated out of OPL 214. Chevron came first, Esso Exploration came second, and Oranti came third, however, there came a marriage with Esso which came third and was given 55 percent of the block. Chevron which came first had 30 percent of the blocks and NPDC that did not participate in the bid was given 15 per cent of the blocks.’, the committee said but Anichebe maintained: “I was not upstairs.”
The Committee: “By the verdict that came from upstairs and the exercise you carried out, would you say due process was followed?” Anichebe: “In the evaluation, we did not make any recommendation as to who was successful or not. We only submitted our evaluation. There was never a time that either Lukman or Kupolokun told me anything about the bid. Lukman was only concerned with getting results. Kupolokun was concerned with whether we had financial limitation and the outcome of the bid. I was not part of the commencement of bids. It was Dublin.”
Another former director, Dublin Green then said: “There was no guideline for the bid given to me until I retired. That is why it difficult for me to say there was change or no changes. If I were in his shoes and I did a job and somebody tampered with it I would say that is not the job I did.”
Kupolokun defended his action saying: “2000 bid round was done well and DPR did evaluation and as far as DPR was concerned, it carried out evaluation and some people won. The petroleum Act does not include me but it envisages that the minister could be assisted. My job title is to advise the president and the presidential adviser. On whether he had approval from the president, he said yes and asked me to pass it to DPR. Some advice were verbal and some written. There is no instruction I passed to DPR that i did not have valid approval for.
The committee was also worried realize that Transcorp which was yet to pay for the oil block OPL 291 used the same block as collateral for acquisition of NITEL. The members disclosed that Transcorp only paid the sum of $7 million out of the amount of $30 million for the block. The committee said DPR ought to have revoked the licence since the expiry date for giving signature bonus had come.
The Exploration manager of Nigerian Production Development Company, Emma Enemou, complained to the committee that DPR was in the process of giving the company’s oil block to Chinese Petroleum Corporation and sought the intervention of the committee.