FG Earns $1bn from Renewal of 22 Oil Blocks 

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  • Set to deploy N72bn intervention fund to tackle power crisis

By Chineme Okafor and Omololu Ogunmade  in Abuja

President Muhammadu Buhari, being Nigeria’s substantive minister of petroleum resources, has approved the renewal of 22 expired and expiring oil blocks, from which the Department of Petroleum Resources (DPR) realised about $1 billion for the government, THISDAY has learnt.

This is coming on the heels of the disclosure by the federal government that it was on the final stages of deploying about N72 billion it had set aside to upgrade selected weak parts of the electricity distribution networks owned and operated by the 11 distribution companies (Discos) in the country.

The approval for the renewal of the 22 expired and expiring oil blocks came few weeks after the House of Rep sentatives claimed that the DPR had renewed expired oil blocks under dubious circumstances, and subsequently realised $10 billion – an allegation the DPR roundly denied.

THISDAY gathered that holders of 25 oil blocks had filed applications for renewal but 22 were approved by Buhari after the DPR’s reviews.

Sources in the DPR and petroleum ministry confirmed the development to THISDAY yesterday in Abuja.

They explained the renewals were done under an ‘accelerated lease renewal programme initiated by the DPR to raise revenue for the government and incentivise operations in the country’s upstream oil and gas sector.

THISDAY had contacted the ministry and DPR for comments on the House of Representatives mandate to its Committee on Petroleum Resources (Upstream) to investigate alleged irregularities in the renewal of oil leases by the DPR, and officials with knowledge of the development spoke to it on condition of anonymity.

“The allegation is totally unfounded, how do you determine there are irregularities. From the DPR point of view, government came up with an accelerated revenue generation drive and to align with that drive, the DPR came up with an accelerated lease renewal programme which is hinged on the positions of the Petroleum Act LFN (law of the federation) 2004.

“The Act mandates the holder of oil mining lease to apply for renewal of lease at least a year to expiration of lease. Based on that the Department came up with the accelerated lease renewal program to process renewal applications that are due to expire between 2016 and 2019 window,” said one of the official sources.

Another source who provided a deeper insight on the development, stated that: “A total of 45 leases between the joint ventures and IOCs fell within this period (2016 and 2019), and 25 applications were received in this regards, and they had gone through rigorous statutory regulatory reviews and submitted for ministerial approval.

“The minister of petroleum resources who is the president has granted approval for about 22 of them which has generated renewal bonuses in excess of $1 billion to the government. So, where did the $10 billion the House of Representatives say they are losing come from?

 “All others are at various stages of processing and in addition they also pay $1 million revised application fee per block. The process is transparent and straightforward.” 

The DPR in an official statement sent to THISDAY yesterday on the development, confirmed that it used the accelerated early lease renewal programme to rake in $1 billion from the renewal of 22 oil blocks.

It also said that its execution of its job in the industry was guided by the Petroleum Act, and that the government was proud of its efforts so far in this regards.

FG to Deploy N72bn Intervention Fund to Tackle Power Crisis

Meanwhile, the  federal government yesterday disclosed that it was on the final stages of deploying about N72 billion it has set aside to upgrade selected weak parts of the electricity distribution networks owned and operated by the 11 distribution companies (Discos) in the country.

The federal government said, so far, it has been able to complete the evaluation of distribution projects to be funded with the intervention fund, and has forwarded same to the Bureau of Public Procurement (BPP) for certificate of “no objection” for them.

Speaking at the inauguration of a two by 60 megavolt amp (MVA) power transmission transformer at the Suleja transmission substation of the Transmission Company of Nigeria (TCN), the Managing Director of the TCN, Mr. Usman Mohammed, said that about half of the N72 billion will be spent on procurement of equipment for upgrade of the distribution networks.

He said that the fund would be used to strengthen very weak parts of the distribution networks, but did not disclose the parts that would be upgraded.

“The biggest problem we have is distribution because that is where investment has not been deployed in the sector, but I can tell you there are various initiatives that are in place to fix the distribution, and parts of their challenges is metering.

“Government has also come up with the N72 billion distribution expansion plan and the TCN is jointly implementing this with the ministry of power. We have substantially completed the deployment of about half of the N72 billion and you know procurement takes time because you have to advertise and forward to BPP,” said Mohammed, shortly after the Governor of Niger State, Mr. Abubakar Sani Bello, commissioned the power transformer which was installed by Messrs MBH Power Limited.

He further explained: “We have completed the evaluation and forwarded to BPP, and waiting for the No Objection. We are looking at key concerns of the distribution to solve. You know the distribution generally have problems but we will look at the biggest problem and eliminate them with that money; that is how it is.”

According to Mohammed: “It is in our (TCN) interest that some investment come into the distribution networks because if you look at the 738 interfaces that we have with the Discos, only 421 are completely covered by protection, meaning the remaining 317 are not covered by protection and which means that any fault from people’s house can hit our transformer.”

He noted that the TCN has set up strategies to eliminate instances of system collapses which are frequent on its network, pointing out that with the plan, such would be eliminated completely from its network in three years time.

“For us to completely eliminate system collapses, we have to strengthen some of the key lines that are highly weak. The line between Owerri – Alaoji – Ihiala -Onitsha, we have to re-string that line because it is the weakest link in the transmission chain and it will be financed by the African Development Bank. 

“We have done the design and preparation and in a couple of weeks we will start the procurement and that will completely eliminate the system collapses we have in Nigeria.

“Every problem we have in transmission we have a strategy to eliminate them, in the next two to three years, every problem of transmission will be eliminated because we will have adequate capacity with redundancy,” Mohammed stated.

On the transformer installed by MBH Power Limited, Mohammed, noted that it was funded with parts of a $100 million provided by the International Development Association (IDA) of the World Bank as additional finance for Nigeria in its Nigeria Electricity and Gas Improvement Project (NEGIP).

The substation, he further added would now have a power transmission capacity of 162 megawatts (MW) from 66MW that it reportedly was, and be able to improve electricity supply to Suleja Town; Madalla; Gawon Babangida; Dikko; Lambata and other areas of Niger State.

“This project is not only one, it involves others, they did 100MVA in Katampe and Apo, they did another 60MVA in Keffi and Calabar, amongst other places, and this one started transmitting power five months ago,” Mohammed, explained.