The clash is another example of how government agencies appear to work at cross purposes and succeed in having the president do their bidding.
Days before the restoration of four oil mining licenses to Addax Petroleum, the Nigerian National Petroleum Corporation (NNPC) launched a blistering tackle on its sister agency, Department of Petroleum Resources, with a strong appeal to President Muhammadu Buhari to reverse DPR’s revocation of the OMLs and reject a reallocation to another company.
The NNPC in a letter to the president on April 20 argued that the revocation of the oilfields would have implications on the Nigerian economy and the diplomatic relationship between Nigeria and China. Addax is owned by Sinopec, a state-owned Chinese firm, the nine-page memo seen PREMIUM TIMES shows.
Three days after the letter was sent, the president overruled the revocation by the DPR, and cancelled the reallocation of OMLs 123, 124, 126, and 137 to Kaztec Engineering Limited/Salvic Petroleum Consortium, a firm DPR picked as a replacement.
The clash is the latest example of how government agencies often appear to work at cross purposes and succeed in having the president do their bidding. PREMIUM TIMES reported on Monday how the Minister of Transportation, Rotimi Amaechi, and the Managing Director of the Nigerian Ports Authority, Hadiza Usman, repeatedly faced off over the award of contracts, and Mr Amaechi at least once directed a procurement process be suspended in favour of an incumbent contractor
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In revoking the four OMLs, the DPR cited Addax’s inability to comply with agreed targets. Addax has a production sharing contract with the NNPC. A panel set up by the Ministry of Petroleum to review the case concluded that Addax had caused the country significant losses in revenue and jobs.
The committee led by a former senator, Magnus Abe, said $1 billion had been invested in the contract but Addax Petroleum called it off over an issue that was unrelated to the project. The action put over 3000 Nigerians out of work, the committee said.
The presidency’s statement, signed by spokesperson Garba Shehu, said: “President Muhammadu Buhari has approved the restoration of the leases on OMLs 123, 124, 126 and 137 to the Nigeria National Petroleum Corporation, NNPC which is in production sharing contract with Addax Petroleum, a company wholly owned by Government of the People’s Republic of China on the blocks. The leases belonging to the Federation were revoked on March 30, 2021.”
“While directing the Department of Petroleum Resources, DPR to retract the letter of revocation of the leases, the President 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,” it said.
NNPC Counters DPR
The NNPC warned the president that the revocation, if unresolved, will create an unprecedented level of contingent liability of well over US$1 billion for NNPC as the party in contract with Addax, reputational damage to the country with possible dire unintended diplomatic consequences.
