The Federal government has concluded plans to divest 26 oil block by June 30th at the first instance and August 31st at the long run.
Chief Executive Officer, Nigeria Upstream Petroleum Regulatory Commission (NUPRC), Engr. Gbenga Komolafe made the disclosure on Friday in Abuja during the Industry Dialogue with the CCE on Divestment.
He revealed that four companies namely: ExxonMobil, SPDC, Eni and Ekpeno have indicated interest in the divestment while Shell will be acquiring the entity being divested by ExxonMobil, Chappol acquiring the entity being divested by Ekpeno and Oando acquiring that of Eni.
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He said that the commission has provided two options for the divesting company which will enable them conclude all arrangements in June or August as they wish.
“What we have done is that we came up proactively with two options. The difference between the two options is that one will take a shorter time and the other will take a loner time giving that we need to conduct due diligence in respect of these regulatory framework” Komolafe said.
Throwing more light on the two options he said that Option A includes, “Grant of Ministerial consent to the divestments, on the condition that entities will retain liabilities until the Commission’s investigation is concluded and the liabilities are allocated to the proper party”.
He added that “The divesting companies will be required to issue an undertaking to retain the liabilities until confirmation of the release by the Commission of all or part of the retained liabilities” adding that the process for option A is slated to be concluded by June 30th.
In Option B, “Ministerial consent will not be granted until the Commission has identified and assigned all liabilities to the capable party”.
He added that “The divesting entities will be required to issue a waiver, waiving their rights to deemed consent as provided in Section 95 (7) (b) of the PIA”.
The Chief Executive added that the divestment will enable the country to shore up it’s declining crude oil production so as to meet up with its OPEC quota.
“This process will yield about 700,000 barrels, optimum production. At the moment, we are recording about 50percent of that which means that if we conclude, it will revup and enable us to meet up with our OPEC quota. So the early completion of the exercise is for the interest of the nation.
“As you have seen today, the industry is very excited about what the commission is doing. We have assured stakeholders in the industry and the Nigerian public that given the fact of section 1 of Petroleum Industry Act, state is vested with the ownership of the asset. So by this exercise, we are letting Nigerians know about the divestment and to the fact that we have established clear regulatory framework that will drive the process. We are committed as a commission to ensure that the exercise is perfomed in a very transparent manner”.
He said that the Commission will ensure that the financial burdens associated with the diverstment is not borne by Nigerian. He added that government will also keep an eye on the financial obligations of the divesting companies to ensure that will is used in the development and expansion of the sector, settlements of environment empact as well as the host community
“We also want to ensure that the financial liability arising from the operations of the assets are transparently determined. These are financial burdens which we don’t want the nation to undertake. Once the obligations are determined, the divesting entities will equally have the right to determine the obligations that will ensue from the transaction. We have equally developed a framework inline with the obligations of the law by which the established financial obligations are situated.
“We want a situation whereby these legacy financial obligations are situated in a manner that federal government of Nigeria will have a line of sight. This means that government will in a manner have some control over the utilization of these funds. We do not want a situation where such huge fund are kept idle but rather utilized in further development of the upstream. So situating the fund will necessarily mean that those funds will reside in Nigeria for the purpose of further development in the upstream”.
Present at the meeting were the Executive Secretary of Nigeria Extractive Transparency Initiative, Dr. Orji Ogbonnaya Orji, representative of Nigeria National Petroleum Corporation Ltd and representative of divesting and acquiring companies.
