Oil bid round: Coalition of civil society groups seeks transparency




Oversight of the processes should be provided by the National Assembly and auditing by NEITI



Following Federal Government’s intention to conduct fresh licensing bid round for Nigeria’s marginal oil fields, Civil Society Organisations (CSOs) and extractive industry media group, Media Initiative on Transparency in Extractive Industries (MITEI) have advised the Federal Government to ensure transparency in the entire process.

The advice formed part of the resolution reached at the end of a one-day workshop on “Improving Transparency in the Oil licensing Process organised by the groups.

Concerned about the dire economic realities in Nigeria as a result of the ravaging impact of the novel Coronavirus pandemic and their potential challenges posed on Nigerians, the workshop was organised to assess the key issues in the petroleum industry and identify the urgent reform options that will ensure the best value for Nigerians.

The petroleum industry experts invited to facilitate the workshop discussed the critical challenges in Nigeria’s petroleum industry.

Focused on the recent announcement by the Federal Government of Nigeria of its intention to conduct a fresh licensing bid round for Nigeria’s marginal oil fields, the thrust of discussions by was on the significance of the proposed licensing bid round and how to Increase revenue for the government, increase Nigeria’s proven oil reserves to about 40 billion barrels and increase Nigeria’s daily crude oil production to about three million barrels.

According to a communiqué issued at the end of the workshop, after due consideration of all the issues, the CSOs 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 realise set national objectives to increase oil revenue, boost proven national oil reserves, and raise the country’s daily oil production capacity.

The groups also advised 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 as the declaration is critical to rebuilding the confidence of serious investors.

The communiqué signed by Peter Egbule and Bassey Udo for Coalition of Civil Society Organisations and Media Initiative on Transparency in Extractive Industries, respectively, also lamented that the 175 marginal oil field licenses issued by the Nigerian government between 2000 and 2007, only one has been developed into commercial production. 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.

“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; 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; 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.

“During the bidding process, Nigerians should be presented with evidence of 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, and measures to effectively monitor the bid process to ensure successful firms pay their signature bonuses in full and into government designated accounts.”

The communiqué also stressed that after the bid round, 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 as well as enforce the drill-or-drop clause in the law and reclaim any license(s) from non-performing winning bidders.

“In the same vein, 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 organisations and the media,” it added.


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