Budgit calls for abolition of discretionary award of petroleum licenses by sitting presidents

BudgIT has asked the Federal Government to critically look into the proposed Petroleum Industry Administrative Bill (PIAB) before it is finally passed into law.

The civic technology organisation at the forefront of raising the standards of transparency, citizen engagement & accountability in a press statement on Tuesday stated that according to Section 8; Sub-section 2 of the Petroleum Industry Administration Bill; “All petroleum licenses shall be awarded through an open, transparent and competitive bidding process conducted by the Commission pursuant to this Act”.

This, it said, “is a welcome idea which means awarding of petroleum licenses will be free and fair enough for everybody. However, we are worried that the President can still award petroleum licenses discretionarily. Section 8, Sub-section 7 of the same bill states that “The President may direct the Commission to negotiate and award petroleum licenses to qualified investors outside of the bidding process. Any such awards may only be for strategic and bilateral purposes.”

“The opportunity to arbitrarily award petroleum licenses led to the infamous Malabu (OPL 245) scandal. It can be recalled that Mr. Dan Etete who was the Minister of Petroleum during Sani Abacha’s military regime, awarded the prospecting rights to the huge OPL 245 block to Malabu Oil and Gas, a shell company in which Mr Etete secretly held a significant stake. Malabu paid only $2m of the required $20m signature bonus, and Abacha died five days after.

“The Department of Petroleum Resources, DPR has also admitted that no due diligence was carried out before the awarding of OPL 245 to Malabu Oil and Gas in 1998. This oil block which is considered to be the richest in Africa, is estimated to contain about 9 billion barrels of crude.

“According to Gabriel Okeowo, BudgIT’s Principal Lead, “Why must the President be able to discretionarily award licenses outside the bidding process? For us at BudgIT, we advise the government to remove from the PIAB the clause giving any sitting President the right to award licenses outside the established regulatory framework, this will go a long way in preventing the recurrence of the Malabu saga. ”

“Malabu is an example of cronyism and corruption that sees senior government officials gift of oil blocks and other publicly-owned assets to self, friends or well-wishers. The Petroleum Industry Bill is meant to build strong institutions that also allow transparent and fair allocation of oil blocks”.