The federal government, through the Department of Petroleum Resources (DPR), yesterday announced the revocation of six oil block licences granted to five companies.
the DPR, under the Ministry of Petroleum Resources, had earlier requested the federal government to revoke the licences, which has finally been approved.
One of the licences is an Oil Prospecting Licence (OPL), belonging to Summit Oil, founded by the winner of the June 12, 1993, presidential election, the late Chief Moshood Abiola, where hydrocarbon is being explored. Five others are Oil Mining Leases (OMLs).
According to a notice issued yesterday to the industry operators by the apex regulator of the oil and gas industry, the revocation was based on a presidential directive to “recover legacy debts” owed by the companies operating the leases.
The five companies are Pan Ocean Oil Corporation (OML 98); Allied Energy Resources Nigeria, (OML 120 and 121); Express Petroleum and Gas Company (OML 108); Cavendish Petroleum Nigeria (OML 110) and Summit Oil International (OPL 206).
The DPR said it revoked the licences “in furtherance of the presidential directive on the recovery of legacy debts owed the federation and in line with the provisions of the Petroleum Act Cap P10 Laws of the Federation of Nigeria.”
Some of the officials of the affected companies told THISDAY on condition of anonymity that they would challenge the revocation.
“Negotiations have been ongoing on these issues for the parties to reconcile the payments but the government’s side was not sincere. They had predetermined motive to cancel the licences and re-award them to other companies. On our part, we will seek redress in the court,” said an official of one of the companies.
“Our assets have been subject of litigation and the government should have waited for the court cases between the partners to be resolved before the revocation. This matter will definitely be resolved in the court,” he added.
In revoking the leases, the apex regulator accused the affected companies of “non-compliance with statutory obligations.”
OML 98, which started production in 1976, is located in the Northern Delta, precisely in what is known in geological parlance as Depobelt, and in the northern fringe of Niger Delta Basin.
The acreage covers an area of 523 square kilometres in Edo and Delta States, with many fields – Ogharefe, Ologbo, Asaboro, Adolo, Owe, Ossiomo, Ona and Erimwindu.
The only OPL affected is owned by the late Abiola’s Summit Oil.
OMLs 120 and 121 have been a subject of litigation between Allied Energy Resources Limited, CAMAC Energy – both Nigerian companies, and Nigerian Agip Exploration Limited (NAE), a subsidiary of the Italian oil giant.
The dispute between the NAE, Allied Energy and Camac allegedly arose from the decision of the arbitration award of the London Court of International Arbitration (LCIA), which NAE had wanted to enforce.
The arbitration award was over a dispute regarding a Sale and Purchase Agreement (SPA) concluded in June 2012 between NAE as seller and Allied Energy as the purchaser, in which NAE was said to have transferred to Allied Energy Plc the entirety of NAE’s interests and rights in the two leases.
NAE had argued that the payment of part of the price for the transferred interests and rights was deferred to be paid by Allied Energy to NAE.
The company alleged that following the non-payment by Allied Energy, it filed the arbitration at the London Court of International Arbitration in accordance with the arbitration terms provided in the SPA, and the arbitration was concluded on February 14, 2017.
Billionaire, Otedola sells off Forte Oil
Billionaire businessman, Femi Otedola has revealed that he has sold his interests in Forte Oil.
Otedola made the revelation on Wednesday on his verified Instagram handle, adding that he has moved on from being a player in the petroleum industry to focusing on his power generation business.
The businessman, who shared photos of the different brand changes that the oil company had undergone, wrote: “A few years ago, my team and I embarked on an arduous task of transforming a moribund petroleum marketing business, African Petroleum Plc (formerly British Petroleum) into Forte Oil Plc; a leading integrated solutions provider with solid footprints in downstream petroleum marketing, Upstream Services and Power Generation and one in which we built intrinsic value to the benefits of our shareholders.
“In line with my principle of business focus, we have divested from our marketing and upstream businesses and shall from now on focus and consolidate on the gains of our power generation business, Geregu Power Plc.
“We wish our successors the very best and urge them to build on our legacies which have been established since 1964.”
CBN says foreign investment is on the rise
Total capital flows to Nigeria between January and May 2019, stood at $14.2 billion, the Central Bank of Nigeria (CBN) revealed last night. Of the aforementioned amount, Foreign Direct Investment (FDI) accounted for $2.87 billion, representing 20.18 percent of the total amount.
The CBN revealed this in a statement that was signed by its Director, Corporate Communications, Mr. Isaac Okorafor while reacting to a Reuters report which stated that FDI in the country dropped last year.
The apex bank said its attention was drawn to the news item on Reuters quoting the World Investment Report, 2019, recently released by UNCTAD on Foreign Direct Investment (FDI) to African countries.
“The attention of the Central Bank of Nigeria (CBN) has been drawn to the news item on Reuters quoting World Investment Report, 2019, recently released by UNCTAD on FDIs to African countries,” the statement said.
The UNCTAD report had alleged a decrease of over 40 percent in FDI inflows to Nigeria in 2018.
The CBN statement added: “While the CBN is not privy to the methodology used in arriving at the figures, we wish to state that available records show a significant increase in FDI in Nigeria during the period 2018, contrary to the Reuters’ report.
“For instance, in 2018, the total capital inflows to the country stood at $19.07 billion out of which FDI accounted for $7.78 billion.
“Furthermore, total capital flows to Nigeria, from January to May 2019 stood at $14.2 billion of which FDI accounted for $2.87 billion, representing 20.18 percent of the total amount.
“The country continues to enjoy steady capital flows due to the prevailing stable macroeconomic environment and sustained investors’ confidence in the economy.
“Against this background, we wish to urge the public to take advantage of several publications by the CBN and the National Bureau of Statistics (NBS), which give adequate and accurate statistics on the subject matter,” the statement added.
Inflation rate rises to 11.40%
The inflation rate rose to 11.40 percent (year-on-year) in May 2019 according to the National Bureau of Statistics (NBS) report.
According to the report, this is 0.03 percent points higher than the rate recorded in April 2019 (11.37 percent). Increases were recorded in all 12 Classification of Individual Consumption by Purpose (COICOP) divisions, that yielded the Headline index. On a month-on-month basis, the Headline index increased by 1.11 percent in May. This is a 0.17 percent rate higher than the rate recorded in April 2019 (0.94 percent).
“The percentage change in the average composite CPI for the 12 months period ending May 2019, over the average of the CPI for the previous 12 months period was 11.30 percent, 0.01 percent points from 11.31 percent recorded in April 2019. The urban inflation rate increased by 11.76 percent (year-on-year) in May 2019 from 11.70 percent recorded in April 2019, while the rural inflation rate increased by 11.07 percent in May from 11.08 percent in April. On a month-on-month basis, the urban index rose by 1.15 percent in May, up by 0.15 points from 1.00 percent recorded in April 2019, while the rural index also rose by 1.07 percent in May 2019, up by 0.17 from the rate recorded in April 2019 (0.90 percent).
“The corresponding 12-month year-on-year average percentage change for the urban index was 11.66 percent in May. This is less than the 11.69 percent reported in April, while the corresponding rural inflation rate in May is 10.99 percent compared to 11.00 percent recorded in April.
431 Nigerian companies indebted to AMCON
Sixty-Two debtors are owing to the Asset Management Corporation of Nigeria (AMCON) N10 billion and above each, the agency has said.
The corporation was established on July 19, 2010, when AMCON Act was signed into law by former President Goodluck Jonathan, with a mandate to acquire bad loans from banks, pay the banks and recover the loans from the debtors.
But eight years into its operation, the corporation is being owed N10 billion and above by each of the 62 high-profile debtors. The debt represents 40 percent of the 12,537 obligors.
AMCON said that 431 debtors, representing 37 percent of the debtors, owe between N1 billion and N10 billion; 1,998 debtors, constituting 16 percent of the total obligors, owe between N100 million and N1 billion while 10,046 debtors, representing seven percent of the total obligors owe between N100 million and below bringing the total number of bad loans under AMCON management to 12,537.
AMCON was created to be a key stabilizing and re-vitalizing tool aimed at reviving the financial system by efficiently resolving the non-performing loan assets of the banks in the economy.
The corporation has in the last eight years of operation, bought Non-Performing Loans (NPLs) worth N5.4 trillion from banks.
There is N3.8 trillion AMCON Bond held sorely by the Central Bank of Nigeria (CBN) and this is expected to mature by 2023.
AMCON’s Managing Director Ahmed Kuru announced that the corporation has so far recovered N1 trillion from the bad debtors, and the agency was doing everything within the ambit of the law to recover the remaining debts.
But recovering the remaining debts from billionaire debtors, who are taking strategic steps to ensure they do not payback will remain an uphill task, and perhaps impossible.
Financial pundits insist that since it took AMCON eight years to recover N1 trillion out of the N5.4 trillion bad debts, it is doubtful if it could recover the substantial amount by 2023, which is its sunset timeline. The N1 trillion recovery represents a meager 18.51 percent of the total debt portfolio.
Speaking on AMCON operations and results achieved so far, a Board Member at Standard Bank Group, South Africa, Atedo Peterside, said that one-third of the money that the Federal Government squandered on AMCON can resolve most of Nigeria’s social and economic problems including fixing the power sector.
Peterside who did not elaborate further on AMCON’s operation, spoke during ‘A Consultative Roundtable with The Central Bank of Nigeria Governor’ tagged: ‘Going for Growth’ held in Lagos.