CSOs call for transparency in future oil block bid round

By Obas Esiedesa

A Coalition of Civil Society Organizations working in the petroleum sector has called for transparency in future oil licence bid rounds including a declaration by President Muhammadu Buhari that the Federal Government would end discretionary award of oil blocks by the Minister of Petroleum Resources.

The CSOs made the recommendation in a communiqué issued at the end of a web-based workshop on ‘improving transparency in oil licencing process’, signed by National Coordinator of Publish What You Pay Nigeria (PWYP), Mr. Peter Egbule and the National Coordinator of Media Initiative on Transparency in Extractive Industries (MITEI), Mr. Bassey Udo.

The group said ending discretionary award was a critical part of the reforms needed in the oil and gas sector.

The group stated: “After due consideration of all the issues tabled for deliberation in consultation with petroleum industry experts, the proffered the following recommendations to help improve the chances of Nigeria delivering the next oil licensing bid round that will not only meet globally acceptable standards, but also realize set national objectives to increase oil revenues, boost proven national oil reserves, and raise the country’s daily oil production capacity.

“That as a prerequisite, President Muhammadu Buhari should publicly declare that he would not invoke his discretionary powers as Minister of Petroleum Resources before, during and after the bid licensing process. This public declaration is critical to rebuilding the confidence of serious investors to participate in the bidding process trusting that whatever will be the outcome will not be subject to any boardroom intervention outside strict adherence to approved bid guidelines and rules.

“Before the commencement of the bidding rounds, Nigerians should be presented with evidence of the following four key deliverables:

(i) A comprehensive national economic development plan detailing how the expected signature bonuses would be utilized in implementing the plan to the benefit of overall industry development and growth; ii. A national data repository to be used as the single source of verified data open to all parties in the bid; iii. Widely published information on the value of assets to be included in the basket of assets to be put on offer, to eliminate arbitrage opportunities resulting from information asymmetry; iv. Terms governing the licensing round must be open, transparent, clear and easily understandable by all parties and Nigerians so that the government’s management of the process can be tracked by interested members of the public.

The CSOs noted stressed that during the bidding process, Nigerians should be presented with evidence of the following: i. Stringent selection criteria during the bidding process to limit the exclusive pool to only firms with the requisite financial and technical capabilities. ii. Comprehensive details of all prospective bidders on a medium easily accessible by members of the public. iii. Measures to effectively monitor the bid process to ensure successful firms pay their signature bonuses in full and into government designated accounts.

They also held that in post-bid process the “government should draw down on the performance bonds of any firm that fails to commence work on the oilfield within the period to be specified in the bid guidelines. ii. Government should enforce the drill-or-drop clause in the law and reclaim any license(s) from non-performing winning bidders. iii. Oversight of the processes should be provided by the National Assembly, auditing by the Nigeria Extractives Industry Transparency Initiative (NEITI), and continuous monitoring before, during and after the bid process by civil society organizations and the media.

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