Why President Buhari overruled DPR and restored 4 oil blocks to NNPC/Addax


It’s no longer news that President Muhammadu Buhari, yesterday, overruled the Department of Petroleum Resources (DPR) and approved the restoration of permits on Oil Mining Leases (OMLs) 123, 124, 126 and 137 to the Nigerian National Petroleum Corporation (NNPC) and Addax Petroleum Exploration Limited.

The NNPC had been in a Production Sharing Contract (PSC) with Addax Petroleum, a subsidiary of SINOPEC, the national oil company of the People’s Republic of China, on these oil blocks.

According to a report from Thisday, the decision to return the operating license on the 4 oil blocks was taken by the President to avoid any major face-off with the Chinese government which is assisting the Federal Government with huge loans for its various infrastructural projects across the country.

The revocation done without due process and consultation with NNPC

The report states that the matter was escalated to President Buhari after an analysis of the diplomatic implications, as well as the image problems that the revocation would have caused, which would make investors see the Nigerian business environment as being operated at the whims and caprices of certain individuals, rather than adherence to rules.

Also, the report said that the NNPC, which Addax was directly partnering in the PSC, was ignorant of the processes leading to the cancellation, adding that the President also considered the legal implications if the matter eventually ended in court.

According to Thisday, the source said, “The revocation was not even done with any consultation with the direct party, the NNPC. That was a big blunder which they should have known because if those guys go to court, they would win because, in reality, they do not have any contract with the DPR, but with the NNPC.

Ordinarily, it is the NNPC that should have communicated to Addax, as the contractor, to say we are terminating this contract, and there are steps to it.

So, it would have become an embarrassment to Nigeria even both in diplomatic terms, because China will feel slighted that we can’t even follow our own rules and considering the number of projects like the Ajaokuta-Kaduna-Kano gas project they are assisting us with, they would have just messed things up.’’

It stated that if due process was followed NNPC should have communicated the decision to Addax on the prompting of the DPR, the regulator, a step that wasn’t taken.

The source also stated, “It would have been embarrassing if the Chinese withdrew from all the projects in retaliation because once they find you can’t even obey your own laws, they too can renege on some of the partnerships they have with us.”

An insider at Aso Rock said the Federal Government’s decision to restore the assets back to NNPC was based on the fact that the state oil giant had a PSC agreement with Addax and the revocation was done without consulting them.

This made Addax to write to DPR and NNPC threatening to utilise all government, diplomatic and legal means to seek redress, describing the exercise as an attempt to expropriate its interests in Nigeria.

In case you missed it

It can be recalled that the Presidential Media Aide, Garba Shehu, in a statement issued yesterday, announced that President Muhammadu Buhari has restored the 4 OMLs to NNPC in line with the current administration’s commitment to the rule of law, fairness and to enable a stable business climate for investment.

The OMLs were revoked by DPR and were in the process of being awarded to Kaztech/Slavic Consortium, owned by Emeka Offor and chaired by Oye Hassan-Odukale respectively before the president’s intervention.

Source: Nairametrics

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