New Telegraph

PIB: FG mulls end to discretionary oil bloc allocation

BONUS

A signature bonus in respect of any licence or lease awarded shall be based on a transparent method for evaluating the acreage

 

The Federal Government has heightened plans to end the power of substantive oil minister on discretionary allocation of oil blocs. The government has, instead, settled for non-discretionary award of petroleum licences, with open bid rounds as the core framework.

 

This is part of the legal provisions in the Petroleum Industry Bill (PIB) currently before the National Assembly for passage. The 252-page draft bill was delivered to the bicameral house of legislature by the executive arm of the Nigerian government on Tuesday, September 29, 2020.

 

The bill, sighted by New Telegraph, reads that petroleum prospecting licence or petroleum mining lease shall only be granted based on a fair, transparent and competitive bidding process; and in compliance with the provisions of this Act, regulations made under this Act and licensing round guidelines issued by the commission for each licensing round.

 

The commission refers to the Upstream Regulatory Commission, which is created by the new law. The success of the reform rests largely on its capacity to deliver. “The commission may periodically publish a licensing round plan,” the PIB declares, stopping short of decreeing some form of regularity.

 

The. inister may, on the recommendation of the commission, grant a petroleum prospecting licence or petroleum mining lease to a winning bidder, provided that the winning bidder has complied with the requirements of the bid invitation.

 

 

The minister shall inform the commission of his decision within 90 days of the application for licence or lease and where he fails to inform the commission within the stipulated time, the licence or lease shall be deemed granted.

 

On the award process, the bill said: “The grant of a petroleum prospecting licence or a petroleum mining lease on a previously appraised area of a petroleum prospecting licence or a surrendered, relinquished or revoked petroleum mining lease in, under or upon the territory of Nigeria, shall be by an open, transparent, competitive and non-discriminatory bidding process conducted by the commission.

 

“The winning bidder shall be determined on the basis of the following bid parameters a single bid parameter, which shall be based on any parameters ranging from a signature bonus to be paid in full prior to the granting of the licence or lease by or on behalf of the winning bidder; a royalty interest; and a profit split or profit oil split among others.

 

The PIB says that notwithstanding the bidding parameters prescribed, where there is a bilateral or multi-lateral agreement between Nigeria and another country, the government may, for strategic purposes and in return for substantive benefits to the nation, direct the commission to negotiate and award a petroleum prospecting licence or petroleum mining lease to a qualified investor identified in the agreement or treaty.

 

A signature bonus in respect of any licence or lease awarded shall be based on a transparent method for evaluating the acreage. “The commission shall call for bids in accordance with a procedure published on its website and in at least two international financial newspapers and two national newspapers with wide coverage.

 

“Where the commission calls for bids pursuant to this section, it shall prescribe a technical, legal, social, economic and financial requirement, including the minimum experience and capacity for an applicant in a regulation or guideline, and the applicant shall be chosen in accordance with the regulation or guideline,” the bill said.

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