By curiously questioning the wisdom of President Muhammadu Buhari, who is also the substantive Minister of Petroleum Resources, in cancelling the revocation by the Department of Petroleum Resources (DPR) of four oil mining leases belonging to Addax Petroleum Exploration Nigeria Ltd., Senator Magnus Abe goofed and exceeded his brief. Here is why:
In a position that can only be interpreted as second-guessing the President, Senator Abe insists that “the Department of Petroleum Resources (DPR) was right to recommend a revocation of the mining leases issued to Addax in the national interest.” Abe expressed this position after President Buhari had cancelled the revocation of the oil leases of Addax.
Clearly crossing the lines of decency and protocol, Abe suggested that President Buhari was deceived in cancelling the illegal revocation of Oil Mining Licence (OML) 123, 124, 126 and 137 belonging to Addax. Abe backed his trenchant, unfounded position by querying whether it was Addax, allegedly accused of tax fraud and abandoned its Nigerian investments for over 10 years, or the DPR that tried to hold them to account that should be held responsible for deceiving the president.
It could be recalled that on March 30, DPR revoked the four Addax licences over the alleged poor development of the assets. The PSCs consists of Oil Mining Licence (OML) 123, 124, 126 and 137. Sarki Auwalu, DPR director, had claimed that over 50 per cent of the assets were underdeveloped, which he said cost the government lost revenue.
But on Friday, April 23 2021, President Buhari handed down an executive approval for restoration of the leases on OMLs 123, 124, 126 and 137 to the NNPC which is in Production Sharing Contract (PSC) with Addax Petroleum. The leases were revoked on March 30, 2021.
According to presidential spokesman Mallam Garba Shehu, the restoration of the OMLs to Addax Petroleum was in line with the current administration’s commitment to the rule of law, fairness and enabling a stable business climate for investment. He further stressed that the development reaffirmed the Buhari administration’s obligation to the rule of law and sanctity of contracts.
The President had also directed NNPC to utilize contractual provisions to resolve issues in line with the extant provisions of the Production Sharing Contract arrangement between NNPC and Addax. This is indisputably the way to go.
Senator Abe, an intellectual of no mean repute, is a former senator and board member of the Nigerian National Petroleum Corporation (NNPC). He recently chaired a presidential inter-ministerial committee set up by a presidential directive convened by the chief of staff to the president.
The Abe-led Committee on Compensatory Contracts and other incentives for Kaztec Engineering Limited said $1 billion had been invested in the contract but that Addax Petroleum called it off over an issue that was totally unrelated to the project. It alleged that the action put over 3000 Nigerians out of work. Talk of giving a dog a bad name. Shortly, like an entity working towards a set agenda, the DPR inaugurated a team to evaluate the “revoked assets” of Addax Petroleum.
Progressing the charade, DPR’s spokesperson, Paul Osu subsequently told Nigerians that, “DPR had recently revoked the four assets of Addax Petroleum Exploration Nigeria Ltd., namely OMLs 123, 124, 126 and 137 due to the non-development of the assets by the company.”
He further stated that a team of experts will evaluate the current status (As-is) of the revoked assets, including liabilities post revocation, in order to facilitate the takeover of the assets by the new operators – Kaztech/Slavic Consortium. New operators? But the whole contrived game fell through with the President’s swift intervention.
Were the flawed revocation allowed to stand the Nigerian government would have shot itself in the foot by a poor disposition towards contractual matters? But good a thing, clearly the President was far better informed on the issues at play. This is especially so, as already Nigeria has a poor reputation with respect to adherence to the rule of law and sanctity of contracts which the circumspect President Buhari administration has been making effort to correct.
More, the special bilateral relationship, Nigeria enjoys with the Peoples Republic China, the owner of Addax Petroleum would have suffered immeasurably. Federal agencies like the Federal Ministry of Finance and National Planning, Debt Management Office, Federal Ministry of Foreign Affairs and others can attest to the level of strategic engagement Nigeria shares with China.
Perhaps, many may not know that China, arguably the world’s largest economy, is playing an important role in Nigeria’s current development trajectory. Despite shrill, often uninformed criticism against borrowing from China, much of the grounds covered in infrastructural development are undergirded by Chines funds.
Going forward, contrary to Abe’s position that it is within the purview of DPR to revoke or allocate oil blocks, the DPR exceeded its regulatory jurisdiction in this instance to terminate the Addax/NNPC contract. Specifically, Clause 19 of the Addax Production Sharing Contract clearly spells out the ground for the Termination of the PSC by the Concessionaire (NNPC) and this is predicated on four specified premises which were not breached.
It is vitally important to note that the PSC is a contract between the Concessionaire (NNPC) and the Contractor (Addax) and that clearly the regulator (DPR) is nowhere a party. But curiously, in this case, the DPR exceeded its regulatory authority to axe the contract.
The key essentials of a contract stipulate having two willing parties, meeting of minds between the parties and existence of consideration. Given the circumstances of the entire revocation, it is not illogical to clearly see that the regulator clearly erred and overstepped its bounds by not only terminating the contract between Addax and NNPC but also concocted a nonexistent contract between NNPC and KEL/SPR which Senator Abe is bending over backwards to defend.
The recent speculative media report titled: “Petroleum Minister, Cronies Plot Kangaroo NNPC Report to Divert $650 million Oil Contracts to Themselves,” finds unwitting reinforcement by Abe’s off-key, mule-headed defence.
Abe, stoutly debunked his alleged involvement in the so-called $650 oil contract scam, insisting that it only exists in the imagination of those interested in ripping Nigeria off. He also insisted that he will continue to defend the country’s interest. In a statement he personally signed, he alleged the report was designed to create the impression of a major scandal and arm-twist the federal government in the recent attempt to revoke some oil blocks from Addax petroleum.
Abe even went as far as indirectly giving a wrist-slap to the Mallam Mele Kyari-led NNPC by suggesting it was not the place of the corporation to award or revoke oil mining licences. Whether he is correct or wrong on this score, it was a needless, prickly missile to hurl in the direction of the corporation in which he is a board member.
Abe is well advised to seek to live by the Latin meaning of his name – Magnus – which translates to greatness. Contradicting Mr President and seeking to contrive crisis dressed up as national interest, thereby attempting to throw the spanners into the cog of an important strategic bilateral relationship like the Sino-Nigerian one is unbefitting of an intellectual of his ilk.
The more uncharitable observers may even wonder whether Abe’s bruising, long-drawn battle with his former political soul-mate, the Minister of Transport, Chief Chibuike Amaechi may have affected his better-known sense of equanimity.
By uncharacteristically muddling his facts, curiously affronting the President and seeking needless battles in turfs outside his specialization can only diminish the reputation of the gentle giant from the Niger Delta. Clearly, it will be needless to progress on this gaffe.
- John, a public affairs analyst, writes from Abuja