How Abba Kyari authorised NPDC payments of $1.099bn for OML 11 Award

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Abba Kyari
Abba Kyari

THREE months after the death of late Abba Kyari, former chief of staff to President Muhammadu Buhari, a letter has surfaced detailing how he authorised the Nigeria Petroleum Development Company, NPDC, to make payments for the award of the controversial Oil Mining Lease, OML 11. OML 11 the oil block located in Rivers State, Southern Nigeria.

Kyari wrote to the permanent secretary of two ministries and the director-general of the Budget Office of the federation stating how the payments should be made by the Nigeria Petroleum Development Company for the OML 11 award. The letter dated July 29, 2019, was addressed to the permanent secretary, ministry of petroleum resources, permanent secretary, federal ministry of finance, and the director-general, Budget Office of the Federation. The letter entitled: RE: CONSIDERATION PAYABLE BY NPDC FOR AWARD OF OML 11 was signed by Kyari.

The letter, which was sighted by Realnews, stated that the president “has approved for payment $1,099,655,792.20 by the Nigeria Petroleum Development Company Limited (NPDC) as Goods and Valuable Consideration for the award of OML 11”.

The letter with reference number: SH/COS/24/A/8928 with State House Address, Abuja, and an embossed Nigeria Coat of Arms, listed six tabulated approvals by the president which would be paid in installments.  They include the payment of $200 million on October 31, 2019; $200 million by April 30, 2020, and $200 million on October 31, 2020. The other approvals are payment of $200 million on April 30, 2021 and another $200 million by October 31, 2021. The NPDC is also to pay $99,655,792 on April 30, 2022.

The letter also directed the Department of Petroleum Resources, DPR, to forward periodically evidence of transfer of funds in instalments by NPDC. It “Directed the Budget Office of the Federation to allocate the sum of $200 million to the electricity distribution intervention project (FGN/Siemens project) and include it in the 2020 budget.”

Kyari also “Directed the Budget Office of the Federation to allocate the sum of $270 million to the Nigeria Sovereign Investment Authority (NSIA) for the Presidential Infrastructure Fund.”

He “directed the Ministry of Finance to set up a Special Purpose Vehicle (SPV) to be managed by the Ministry of Finance incorporated and to credit the SPV with the $200 million for the electricity distribution intervention project.

He also “directed the Ministry of Finance to note that the funds received from NPDC in 2019 should be allocated to the SPV, while the transfer of the funds to NSIA should be from the amount to be received in April 2020 and October 2020.

The letter also “Directed the Budget Office of the Federation to utilize the balance of $629,655,792 to fund the regular budget in the period the funds are received.”

Several attempts to reach NPDC to confirm if it has made the payments as directed by Kyari proved abortive. Also, the Group Public Affairs Department of the Nigerian National Petroleum Corporation, which speaks for NPDC, could not get back to us with a feedback as at press time.

Realnews reports that, over the years, the OML 11 located in Ogoniland in the Niger Delta, Southern Nigeria, has been enmeshed in controversy. There are various strands to the controversy. One case is between Shell and Ogoni people. Another is between the Federal government and Shell, and the last is between Shell, on one hand and the Rivers State government and Ogoni people on the other.

Realnews recalls that there was a dispute between the Ogoni people and Shell Petroleum Development Company, SPDC, over the assets in the OML, particularly, because of environmental degradation. The Ogoni people had stopped SPDC from operating in the area for more than 26 years ago and had taken SPDC to court. While they were still in court, the Ogoni people reverted to an earlier judgment they obtained from another court which ruled in their favour to sell the OML 11 to the River State government.

Based on this, recently, the Rivers State government announced that it has bought the 45 percent stake of SPDC in OML 11. According to Governor Nyesom Wike, Rivers State made a bid of $150 million supported by a bank guarantee which is in an escrowed account and cash payment to the deputy sheriff in the sum of N1 billion payable to the judgement creditors.

This notwithstanding, Realnews reports also that the Federal High Court in Abuja, on August 23, 2019, ordered the ministry of petroleum resources to renew the OML 11 to Shell Petroleum Development Company for 20 years instead of 30 that the oil company requested.

Prior to this ruling, the federal government, in a letter dated March 1, 2019, and signed by late Kyari, directed the group managing director of Nigerian National Petroleum Corporation to direct the NPDC to take over the operatorship of OML 11 from SPDC not later than April 30, 2019. The NNPC is also to ensure smooth re-entry given the delicate situation in Ogoniland.

At the time Kyari gave the order, Shell was still processing the renewal of OML 11 license. Shell also negotiated with the Transcorp to buy its stakes in the OML 11 in the event of the renewal. Other investors also considered paying the $1 billion Shell wanted Transcorp to pay for its stakes in OML 11.

Realnews gathered that, when the going was good, the OML is a joint venture between NNPC, which owns 55 percent stakes and other international oil companies, IOC, such as Shell, TOTAL and ENI. Together they all own 45 percent stakes.

Realnews also reports that Shell is the operator of the joint venture arrangement between NNPC and the IOCs on the OML 11 and could not continue operations because of the irreconcilable disagreement between the company and the people of Ogoni.

Contacted, Bamidele Odugbesan, spokesperson for SPDC, said: “SPDC has not sold its interest in OML 11 and as operator of the lease on behalf of the SPDC joint venture partners; we have continued to engage with the authorities on options available for the amicable resolution of issues around the renewal of the lease.”

– Jul. 17, 2020 @ 19:49 GMT |

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