KNOC claims that the outstanding balance was offset in the form of infrastructure construction projects. Settled cases in Nigeria and abroad have found that it is not sub judice for the media to talk about a case being dealt with by a court in the overriding public interest. A detailed report was prepared by the House of Representatives Ad Hoc Committee on Investigation of the Activities of the Department of Petroleum Resources (DPR). One of its key conclusions is that the country was shortchanged by as much as $231 million in foregone signature bonuses given the questionable manner in which two deep offshore oil blocks – oil prospecting licenses (OPLs) 321 and 323 – were awarded in 2005.
In s nutshell, ONGC Videsh Limited (ONGC Videsh) emerged the highest bidder for both blocks during the bid round with a price of $485 million and should have been announced the outright winner depending on the consideration for the commercial bid. But ONGC Videsh was denied the fruit of its victory when Edmund Daukoru, then-Minister of State for Petroleum Resources ruled that KNOC had a right of first refusal (RoFS) – an important condition-precedent that was virtually unknown to other bidders at the beginning of the exercise – and invited the company to match the ONGC Videsh bid.
The HAHC’s investigation disclosed that Daukoru’s action was manipulated by commitments he had entered into with KNOC officials in July 2005 just previous to the auction round – a MoU that was formalized in March 2006 by then-presidents of Nigeria (Obasanjo) and Korea (Roh Moo-hyun) during the latter’s visit to Nigeria. The HAHC was shocked that Daukoru and the former president measured the deliberate subversion of the integrity of the bid round as nothing more than a slight misdemeanor depending on nebulous commitments by KNOC. Still, the HAHC was willing to neglect the infraction if the juicy carrot KNOC was offering in the form of an enormous investment in the downstream sector of the oil and gas sector would confer real comparative beneficial advantages on Nigeria but in the end it turned out to be a mere mirage. According to the HAHC, Daukoru’s action was a total disservice to the nation because he knew as of the time he entered into the MoU with KNOC that there were no strategic downstream projects attached to any deep offshore blocks.
The HAHC regretted that there was no independent confirmation of the costs of KNOC’s touted projects and ended that there is no way of concretely ascertaining the projects’ real gains for the nation. The HAHC also established that KNOC portion of the signature bonuses ($92.3 million) was paid in June 2006 – about 12 months after the bid round was completed ($ 161.7 million being the portion of its Nigerian partner, Equator Nigeria Limited, was paid in March 2006). None of these payments was made in line with the guidelines which required immediate payment of 50% of the signature bonus at the time of the Bid Round or within 48hours by a company with a RoFR.
Among the HAHC’s other findings are:
— The DPR falsely showed that KNOC has fully paid up the equivalent bid by ONGC Videsh;
— The DPR performed the PSC on both blocks without proof of complete payment of the signature bonuses, contrary to the stipulated guideline that No Awardee of a block can execute a PSC without full payment of ALL fees (caps for emphasis); and
— Daukoru’s states that the one-week notice of the introduction of the RoFR given to the bidders was sufficient was deemed untenable in a system designed to be fair and transparent. The HAHC viewed it as an attempt to work backwards from the answer given the spate of MoUs he had signed with different Asian national oil firms.
