Financial Energy Review
……..NUPRC Courageous by It’s Public Stance……..
..by Ben Ndubuwa…
Petroleum Industry experts have condemned the recent consent given by President Mohammadu Buhari to Seplat in the controversial acquisition of the ExxonMobil Asset. According to a recent statement from Seplat, the company had received a letter from the Honourable Minister of State for Petroleum Resources (“HMSPR”) Chief Timpre Sylva notifying Seplat Energy that His Excellency, President Muhammadu Buhari has graciously approved that Ministerial Consent be granted to Seplat Energy Offshore Limited’s (a Seplat Energy subsidiary) cash acquisition of the entire share capital of Mobil Producing Nigeria Unlimited (“MPNU”) from its shareholders, Mobil Development Nigeria Inc (“MDNI”) and Mobil Exploration Nigeria Inc (“MENI”), being entities of Exxon Mobil Corporation registered in Delaware, USA (“ExxonMobil”).
President Muhammadu Buhari who doubles as the Minister of Petroleum Resources, had said on Monday in Abuja through his spokesman Femi Adesina that the president’s consent was in consonance with Nigeria’s drive for increased indigenous participation in the energy sector.
Meanwhile, the Nigeria Upstream Petroleum Regulatory Commission (NUPRC) has come out strongly to oppose the consent given by the President to Seplat in the acquisition of the ExxonMobil asset. NUPRC insisted that the status quo as regards the acquisition of the entire share capital of Mobil Producing Nigeria Unlimited by Seplat Energy Offshore Limited had not changed. NUPRC specifically stated that the status quo was : the decline of assent to the transaction or share acquisition of ExxonMobil shares by Seplat.
According to Petroleum industry experts this is quite interesting and ironic. “It represents a good case study on PIA institutional powers. One might want to ask about the relevant PIA provisions that guided this decision” Prof. Wumi Iledara, Executive Director EEF Petroleum Policy Advocacy Group said.
“NNPC Limited opposed, Petroleum Commission disallowed, Office of the Minister consented! Quite ironic indeed. That the Upstream Commission is standing by its original public stance is courageous, even if its original decision was wrong. Hence the case is in arbitration. There is no longer a discretionary power for petroleum assets acquisitions or relinquishment in the PIA, is there? This is a governance and lease administration issue not fiscal. And commission has the megaphone not the Press Secretary at the Vila” Prof. Iledara said.
He said that there is the need to separate a presidential order from a ministerial action within the context of the oil and gas sector. The oil and gas sector is bleeding in Nigeria because of mixing the Ministerial functions responsibilities with presidential executive orders. “Nigeria has one President, but too many personalities with delegated petroleum ministerial authority and in the process, one of the key objectives of the PIA, which is functional independence of PIA institutions, without disavowing interdependent cooperation has been compromised! It, therefore, appalling to interject through a presidential press statement on an issue like divestment of a petroleum asset. I just kept wondering who is advising the MoPR on oil and gas matters. The procedure on which institution announces ministerial consent on lease administration is the Commission. It is a governance issue” he said.
Prof. Iledara who is also the Ghana National Petroleum Corporation Research Professor and Chair at the University of Cape Coast, noted that Assets acquisition process is well articulated in the PIA. “Governance is about Institutional power and responsibility and not personal power display” he said.
Furthermore it is said that the issue of contradictory pronouncements by the Minister and the regulator on the Minister’s Consent for the ExxonMobil and Seplat transactions is an unwholesome disgrace to the government. As this gives the impression that there is discord or disunity in the government. Of course. More so is the fact that this is not the first time it is happening. Given that the procedure and process for granting minister’s consent to assignments of oil and gas licenses and leases has been very much part of the regulatory tradition and is a carryover from the Petroleum Act to the Petroleum Industry Act regime.
“The PIA requires the NUPRC to conduct all the necessary technical and regulatory processes following any such application and to advice the Minister how to proceed. If there are outstanding regulatory issues raised by the Commission, then these must be addressed by the applicants before the Minister grants consent. They can surely not be ignored or lightly treated by the Minister. Due process also requires that such approval or consent ought to be conveyed to the Commission first before the Minister’s spokesperson announces or conveys same to the applicant companies. The Minister will be acting ultra vires to announce a consent where there are objectionable regulatory encumbrances clearly stated to him by the regulatory agency” Dr. Francis Adigwe, CEO of Multi Oil and Gas Company Limited said
Dr. Adigwe who is also a PIB Consultant to Nigeria Senate, said that the problem created by the announcement of minister’s consent in the instant case of ExxonMobil and Seplat is a test case for the interpretation of the provisions of the Petroleum Industry Act. “Of course, many laws contain lacuna that must be filled by either practice or judicial intervention. This is where the implementation committee which contains representatives from the office of the Minister and the agencies is important and critical. The authorities, both the minister and the Commission have not conducted themselves in a worthy manner in the instant case. There’s a need to further improve the implementation of the PIA which is showing obvious weaknesses since this Act was enacted. I believe the National Assembly will soon begin a hearing to audit and evaluate the implementation of this law. This will be necessary before undertaking any review or amendment of the Act as are being proposed by the executive” Dr. Adigwe said.
