The Chief Executive of the Nigerian Upstream Petroleum Regulatory Commission (NUPRC), Engr. Gbenga Komolafe has rejected Nigeria’s President Buhari’s consent for the approval of the acquisition of Exxon Mobil Shares by Seplat Energy.
The denial came in an interview he granted Arise TV on Monday evening and followed with a press release that has been widely shared on social media.
According to the press release, Engr Komolafe claimed that the “status quo” remained the same revealing that as the sole regulator in the upstream sector it was by law the sole decision maker in this transaction and not the president.
The press statement reads:
“The Nigerian Upstream Petroleum Regulatory Commission (NUPRC) affirms that status quo remains in respect of ExxonMobil/Seplat Energy share acquisition.
Responding to media enquiries on latest development about the transaction, the Chief Executive of the NUPRC Engr. Gbenga Komolafe clarified that the Commission in line with the provisions of the Petroleum Industry Act 2021 is the sole regulator in dealing with such matters in the Nigerian upstream sector.
As it were, the issue at stake is purely a regulatory matter and the Commission had earlier communicated the decline of Ministerial assent to ExxonMobil in this regard. As such the Commission further affirms that the status quo remains.”
Confusion in the Presidency
President Muhammadu Buhari had just a few hours earlier approved the acquisition of Exxon Mobil shares by Seplat Energy Offshore Limited, in his capacity as Minister of Petroleum Resources, the Presidency had said.
According to a statement by Special Adviser to the President on Media and Publicity, Femi Adesina, the consent is also in consonance with the country’s drive for Foreign Direct Investment (FDI) in the energy sector.
However, Engr. Komolafe’s statement and interview on Arise TV appear to have contradicted the President suggesting confusion between the Presidency and a regulator.
The apparent confusion could also send wrong signals to the international community about the inconsistencies between government officials. it is even made worse when it is the order of a sitting president that is been trampled on by its own regulator.
In approving the deal, President Buhari cited the Petroleum Act of 1969 which was a basis for its own “Ministers” consent. However, the NUPRC cited the PIA as the source of its own powers suggesting that the PIA was the reference act for the transaction.
A legal expert who spoke to Nairametrics suggests the Presidency may have been correct as the PIA mostly addresses oil-producing licenses while oil mining licenses rely on the Petroleum Act of 1969.
Another lawyer suggested this transaction brings to the fore the deficiencies of the PIA as it allows for several interpretations which are often exploited by players in the sector depending on which one suits their needs.
On February 25, Seplat Energy Plc announced an agreement to acquire the entire share capital of Mobil Producing Nigeria Unlimited from Exxon Mobil Corporation, Delaware for $1.28 billion.
The transaction entails the acquisition of ExxonMobil Nigeria’s entire offshore shallow water business.
But NNPC, Nigeria’s state-owned oil company is also interested in acquiring the Mobil’s share of the asset getting an injunction against the sale.
However, the NUPRC rejected the deal claiming that it “failed to follow the procedure for assignments laid down in the Guidelines by not providing the requisite notices to the Commission at all relevant stages of the transaction. Even if the transaction has been between Seplat Energy Offshore Limited and the MPNU shareholders, responsibility to ensure compliance with Nigerian laws, rules and regulations always remain that of MPNU, the entity that was awarded the assets.”