SECRET DEAL: Obasanjo’s Daughter Receives Oil Block without Much Competition

Daughter of an Ex-President of Nigeria, Iyabo Obasanjo

A company owned by a daughter of former President Olusegun Obasanjo is among the beneficiaries of the Federal Government’s recent secret allocations of prize oil blocks, Daily Trust investigations show.

Findings reveal that All Grace Energy, in which Senator Iyabo Obasanjo-Bello has majority stake, got the oil block Ubima Creek field OML 17 in a discretional process without competitive bidding.

Some oil companies and industry experts said the secret allocations are against international best practices.

Daily Trust learnt that the secret allocations were done over the past one year, even though government had said the process of awarding oil licences were to be executed publicly through competitive bidding.

A newspaper report recently said All Grace Energy is among companies that benefitted from the deals.

Records made available to Daily Trust by the Corporate Affairs Commission (CAC) revealed that Iyabo Obasanjo-Bello is the major shareholder of All Grace Energy, which was registered on July 12, 2006 with N30 million share capital.

Mrs Obasanjo-Bello has six million shares, followed by other directors/shareholders: Abe Magnus Ngei (2 million), Mrs Abiri Dorcas (3 million), Dr. Adenikinju Adeola (3 million), Ugbeya Donatus (1 million), Alabi Yekini (1 million) and Alhaji Abubakar Abdullahi (1 million).

The company was registered “to operate marginal fields for the purpose of producing petroleum, natural gas, liquefied petroleum gas etc,” and has filed annual returns only up to 2007, according to CAC records.

Apparently reacting to the recent report that oil blocks were awarded illegally, Director of the Department of Petroleum Resources, Mr. Osten Olorunsola, said at a conference in Houston, United States, that the president is empowered by law to make such allocations.

This development flies in the face of the Federal Government’s consistent pledges to conduct fresh oil bid round. The last public oil bid was conducted during President Olusegun Obasanjo’s regime.

In 2010, for instance, Petroleum Minister Diezani Alison-Madueke said government was trying to “sort out some issues” surrounding the previous bid rounds before it starts fresh ones.

Instead, the government apparently resorted to secret allocation of choice oil blocks to companies belonging to cronies, family members and associates, industry analysts say.

A player in the oil industry, who craved for anonymity, told Daily Trust the government’s action would discourage competition among indigenous oil operators and also send wrong signals to international investors.

A source at DPR said that the process of awarding the oil blocks to Iyabo actually started during Obasanjo’s administration but “a disagreement between Shell and DPR over the area to farm-out couldn’t be reached until recently when the Malabu oil block deal was sealed between the Federal Government and the multinationals.”

Oil block deal conditions not met

When our reporter contacted the spokesperson for the DPR, Mrs Belema Osibodu, she did not confirm or deny that Iyabo’s company was given the oil block but said the marginal fields were awarded based on some conditions.

She said the conditions included the development/execution of a public private partnership (PPP) model for three pilot projects under the small scale gas utilisation scheme.

Under this arrangement, Osibodu said, a gas-fired power plant of not less than 5mw shall be dedicated to supply electricity to Ubima community of Rivers State; an LPG extraction plant shall be installed as part of gas processing facility; and a part of the produced liquefied petroleum gas shall be designated for domestic use and support of small scale industry in the community.

But when a Daily Trust reporter visited Ubima community in Ikwerre local government area, there was no indication that such project was being executed. The community happens to be the country home of Governor Rotimi Amaechi.

The chairman of Ubima community, Elder Daniel Anwuzurike, told Daily Trust that the community has been living without electricity supply for the past three months.

Anwuzurike said he was not aware of any power project going on in the Ubima community.

‘Secret oil block deals going on for long’

The controversial oil field is considered under “marginal oil fields” which the Petroleum Act (Amended) 1996 defines as “such field as the President may, from time to time, identify as a marginal field.”

The law provides that the holder of an OML can farm out (lease out) any marginal field which lies within the Oil Mining Lease (OML).

Also, the president may cause the farm-out of a marginal field which has been left unattended for a period of not less than 10 years from the date of the first discovery of the marginal field.

Reverend David Ugolor, Executive Director, African Network for Environment and Economic Justice (ANEEJ), said this was not the first time such secret allocation of oil blocks was done by a president.

“In any case, the development contravenes global best practice of open competitive bidding and as such should be discouraged,” Ugolor said. “Nigerians are also kept in the dark as to how much accrued to the country from the exercise. The unresolved regulatory issues has not allowed potential investors, both local and international, to make huge financial commitment in the sector. Nigeria is losing huge resources from the dwindling investment in the sector and there is also loss of potential revenue from royalties,” he added.

Ifeayi Izeze, an Abuja-based consultant on strategy and communication, said the controversies surrounding the delay in passage of the Petroleum Industry Reform Bill (PIB) could be blamed for the delay/shifting date for the 2012 oil bloc bid round.

When Daily Trust contacted the spokesman for the Nigerian Extractive Industry Transparency Initiative (NEITI), Mr Orji Ogbonnaya Orji, he said it is not the responsibility of NEITI to decide how oil bid rounds will be conducted.

He however added that NEITI expects to be invited to observe the process in line with provisions of the law.

Culled from a Nigerian newspaper, Daily Trust

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