The Federal Government collected a total of $2.11bn revenue from oil block bid rounds between 2003 and 2007, a document prepared by the Department of Petroleum Resources has revealed.

Mr. Odein Ajumogobia, Minister of State for Energy (Petroleum)

A scrutiny of the bid rounds, especially the sale of 26 oil blocks in the twilight of former President Olusegun Obasanjo’s administration, is the subject of an investigative hearing by House of Representatives joint-committee on petroleum upstream, downstream and gas.

The committee had last week, fixed between Tuesday and Wednesday this week to commence its work, just as it had summoned the Nigerian National Petroleum Corporation, DPR, and all the oil companies to appear before it.

Details of oil block proceeds showed that $105.42m was generated in 2003 comprising signature bonuses, application fees, bid processing fees and speculative data sale.

The DPR document, which has become a working material for the House oil sector probe panel and the House Committee on Finance, indicated that $59.44m was realised in 2004, while in 2005, $1.084bn was collected.

Also, $405.34m and $478.73m were realised in 2005 and 2006 respectively.

Investigations showed that the revenues collected were paid in the DPR/NPD MoU account with Diamond Bank Plc and not the Federation Account.

Other revenues the DPR collected in local currency amounted to N2, 49bn, out of which royalties paid by oil companies accounted for N2.47bn, between 2003 and March 2008.

Apart from royalties, other revenues collected came from penalties for gas flared, concession rentals, pipeline fees and licence permits.

Following inconsistencies in royalties paid by the oil majors and the self-assessment of royalties paid by them, Obasanjo’s government had in 2005 directed the DPR to reassess royalties paid by the companies from 1990 to 2006.

Though the DPR claimed that the exercise had been carried out and a huge amount of money the country could have lost was recovered.

It was, however, silent on the amount involved.

It said, “In the wake of this exercise, huge amounts of money that could have been lost because self-assessment by companies to determine their liability for royalties, have so far been realised.

“This provided the impetus for the department to design a robust Royalty Management System focused on assessing and billing the companies.

“It is anticipated that by the end of 2008, the billing system would have been fully in place. The department is at the final stages of completing reconciliation of royalties with the oil companies.

Revenues from royalties are paid directly by the oil companies into a designated Central Bank of Nigeria Federal Government account in the Federal Reserve Bank in New York.

The Minister of Energy, Petroleum, Resources, Mr. Odein Ajumogobia, had on June 16, 2008 sent the Director of DPR, Mr. Tony Chukwueke, on compulsory leave to allow for investigations into the 2007 bid round.

Chukwueke had suffered the same fate in 2006 over controversy that arose from oil blocks sales.

According to the minister, an in-depth audit relating to the 2007 Oil Prospecting Bid Round necessitated Chukwueke’s suspension in June.

Obasanjo had on May 14, 2007, conducted bid rounds where 45 blocks in the inland basins, continental shelf, onshore Niger Delta, and the deep offshore regions were offered.

Major oil-producing companies operating in Nigeria were did not take part in the exercise and relatively unknown companies were declared winners for majority of the blocks.

Besides Obasanjo, a former Minister of State for Petroleum, Dr. Edmund Daukoru, was criticised for the last minute sale of the oil blocks, seen by many as bereft of due process and transparency.

Former government officials and their cronies were alleged to have been the major beneficiaries of the exercise.