Stakeholders in the oil and gas sector have said that previous bid rounds in Nigeria’s marginal oil fields revealed a sharp decline in interest from serious investors, both local and foreign.
The Stakeholders therefore recommended that terms governing licensing round must be open and transparent, saying this will boost investors confidence.
This was part of resolutions reached at the end of a one-day workshop on improving transparency in the oil licensing process organised by a coalition of civil society organisations and the media.
The resolution was contained in a communique issued at the end of the virtual workshop. The communique was jointly signed by Peter Egbule, for Coalition of Civil Society Organisations and Bassey Udo, Media Initiative on Transparency in Extractive Industries.
The workshop also recommended that for the purpose of transparency, oversight of bidding 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.
The Stakeholders during the workshop raised concerns that Nigeria’s daily oil production has consistently declined from about 2.3 million barrels per day in 2014 to 1.6 million barrels per day in 2019.
“In 2005, only 57 percent of the oil blocks offered for auction secured at least one bid. The number dropped to 40 percent by 2007. Many of the serious investors were concerned about the law regulating operations in the oil industry. They complained that the legal framework cedes too much powers to the Minister of Petroleum Resources to award or revoke licenses based on his or her discretion,” the communique read.
The Stakeholders said workshop was necessitated by recent announcement by the Federal Government of its intention to conduct a fresh licensing bid round for Nigeria’s marginal oil fields
The Stakeholders in the communique proffered various 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 ooilproduction capacity.
It stated that before the commencement of the bidding rounds, Nigerians should be presented with evidence of the following four key deliverables: 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.
Others include a national data repository to be used as the single source of verified data open to all parties in the bid; 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;
“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 aadherence to approved bid guidelines and rules,” the communique read.
The communique reads further, “During the bidding process, Nigerians should be presented with evidence of the following: Stringent selection criteria during the bidding process to limit the exclusive pool to only firms with the requisite financial and technical capabilities.
“Comprehensive details of all prospective bidders on a medium easily accessible by members of the public; Measures to effectively monitor the bid process to ensure successful firms pay their signature bonuses in full and into government designated accounts.”