Like or revile her, Diezani Alison-Madueke, immediate past Minister of Petroleum Resources, elicited extreme passions as a minister you could not ignore. In this no holds barred interview with THISDAY Editors, she opens up on her stewardship and several of the critical issues that have followed in her wake, insisting that her reforms are being resisted by a few vested interests, as she acted in the best interest of the country. Excerpts:
Tell us about the involvement of Septa/Seven Energy in the NPDC joint venture with Seplat Petroleum. How did they (Septa/Seven Energy) get involved after Shell had sold its interest in OMLs 4, 38 and 41 to Seplat Petroleum?Well, the acquisition by Seplat Petroleum of Shell's interest was before I became minister, following which we sat down with NNPC which had assigned its 55 percent in the three blocks to NPDC because the joint operating agreements allow it to do so; to prepare a strategic growth plan for NPDC.
According to the growth plan, if we followed it, in terms of moving assets or assigning certain assets to NPDC over the next four years or so, by 2015, NPDC should move from a company that was producing approximately 40,000 barrels when we came in last year per day to one that will be producing about 265,000 barrels per day. At which point they would be able to rub shoulders with the Petrobrases and Petronases of this world and that is critical for the country.
So was there a tender process to assign NNPC's 55 percent?
You don't have a tender when you are assigning to NPDC, which is a wholly-owned subsidiary of NNPC. First of all, it is owned by NNPC, it is the 55 per cent that is already owned by NNPC by law. So, NNPC and the government can decide to sell it in the open market so to speak, or assign it, for the right reasons, to NPDC. So when you are assigning it to NPDC, it is simply a matter of convening it to the subsidiary. Of course, there are various things to sign, and it is the minister's prerogative to do that, and that is exactly what we did. What transpired between NPDC and Seven Energy later was merely a transactional agreement, and it was a funding agreement. That was what happened, and that is what was assigned to the NPDC; there was nothing else in that transaction at all.
We have other things in the growth plan that we also intend to assign to NPDC to ensure that it meets the target of 265,000 barrels a day. It is for this reason that some of these other blocks - OMLs 30, 42, 40 and 34 - that Shell and its partners are selling were included in the NPDC growth plan just for the main reason of growing NPDC because we consider them national security and economic risks. For instance, by law, once you divest from a block as a multinational, the operatorship automatically reverts to the government through NNPC and it is the prerogative of the NNPC to now assign that operatorship as it deems fit on behalf of the federal government of Nigeria. But you know there was an issue with Shell over the current set of blocks it is trying to divest from because it appeared they were giving those who bid for the blocks the impression that they would bestow the operatorship on them. It got to the point Shell was called in three times and warned that they cannot assign operatorship of the blocks and they were written to by the Group Managing Director. Until out of concern we had to actually take out an advertorial in the newspapers - a buyer beware type of advertorial - telling everybody this is the situation; so know what you are getting yourself into. So the point is operatorship is not automatically given to a third party acquiring the shares and it is not given to them by Shell.
In fact, NNPC/NPDC did bid for OML 34 by exercising its pre-emptive rights, but they couldn't match what the bidders had offered to Shell for the blocks, talk less of what was offered for OML 30. This compelled them (NNPC/NPDC) to pull out. But since NNPC has 55 per cent of the said blocks, the decision was taken that in those two we would hold operatorship of those blocks on behalf of the federal government for the safety and security of our assets and the security of the economy as a whole. I have been quiet about them, because for me they are security issues. Also, for me personally, I know what I have gone through in the last few months, but the truth of the matter is that to do this, Mr. President had to give his full support. But in doing this, we have faced all kinds of opposition for obvious reasons, because they are extremely prolific blocks. So to tell you the truth, I am not sure where the newspaper reports came from, or who is actually behind it, since I am sure they know the true story; perhaps they don't or maybe they did not bother to do their home work. But I can tell you that we have been sticking very faithfully to the growth plan we have decided on, and the truth is that at the time we looked at those two blocks, we did not even know who was coming out to bid for them; not that it would have mattered in the first place, because it is either we were going to do it or were not going to do it.
These are the issues pertaining to the national oil company – I call NPDC a national oil company because that is what we have now as the national oil company. But I am really pleased to say that if we were able to get to 93,000 barrels, approximately 100,000 at this point in the period of about eight months, then I have no doubt that by 2015 (unless, of course, the plan is not continued and that depends on who is in charge at the time over the next four years), we will hit the 265,000 barrels per day mark. This would make history for us in so many ways that we can't even begin to talk about here.
Yes, but was there a competitive tender to appoint Septa/Seven Energy for the financing agreement with NPDC for blocks 4, 38 and 41?
I don't think with NPDC when it comes to a funding arrangement, it is opened to competitive bidding. For instance, when businesses take loans do they have competitive bidding with the banks?
Why? Because, at the end of the day, Septa/Seven Energy also benefits by getting a share of NPDC's oil in exchange for its investment?
If those blocks were so strategic, we would have expected government to be involved in that transaction between Septa/Seven Energy and NPDC?
Like I said, they do not own the blocks, those are service management agreements. It is NPDC that owns the blocks; it is when we are talking of selling our blocks that government, through the ministry, gets involved because you have to now award a prospecting licence. However, we own the blocks, so when it comes to the issue of service management agreement, it is a different matter and it is a completely different procedure. This is a financial arrangement and not a bidding round. Government only comes in very heavily by law when the assets are being taking out of our hands. But in this particular case, the assets are in our hands, we own those particular blocks so that is not the issue at all in this case. That is why for OML 119, Agip had the same agreement with our partners - they had the service management agreement for a long time. But once the time had come and they were ready to sell it, of course they wanted to buy the block because they knew the quantum of reserves that we had in that particular block, but we still chose to assign it instead to NPDC. This means that when it is a matter of consultancy services, it is an agreement between NPDC and whoever they choose to do business with and raise funds; they are not matters where government or the ministry comes in and goes into an open bidding process because the assets are ours and they continue to be ours.
You say that there is no tender required for the appointment of a company to enter a service level agreement with NPDC, but we recall that in the case of OML 119, for which Agip was appointed under similar terms, there was a tender process which was held under Dalhatu Bayero around 1998 who was at the time the GMD of NNPC. So how come no tender was required for the appointment of Septa/Seven Energy?
Going to OML 119, we were looking for people or organisations which had deep water experience and we selected two IOCs to partner with us to develop the OML. The concept was for them to develop OML 119 as both an operator and funding partner. This is totally different from the current concept in which the asset is onshore where NPDC has sufficient experience to deal with the operations, but lacks the requisite funds to meet its obligations. Therefore, the two arrangements are not on the same basis at all.
Septa/Seven Energy, Camac Energy and Mid-Western Energy, all belonging to Nigerians who you may know, have also been linked in the current effort by Shell and its partners to divest of 45 percent of their interest in blocks 30, 34, 40 and 42. Their interest in the current programme stems from their attempt to enter the same service level agreement with NPDC. As a matter of fact, we gather that it is because of these companies, NNPC/NPDC has elected to retain operatorship of the oil blocks as provided in the JOA.
As part of the existing strategic alliance between NPDC and Seven Energy/Septa, there was actually a joint bid submitted by the party on the Shell assets. The synergy being the well known capacity of Seven Energy in gas development in Nigeria and NPDC’s focus to ensure that the gas supply from Ughelli and Utorogu which depend on OMLs 30, 34 and 42 is retained by competent and experienced partnership that can guaranty none disruption of gas supply to support the federal government’s power agenda.
What protection does NPDC have under this service level agreement to ensure that our gas resources are not jeopardized in OMLs 30 and 34?
NPDC as NNPC’s E&P subsidiary is fully protected and therefore has a statutory responsibility to protect the federal government’s assets including our natural gas resources and develops same for the benefit of the nation. That is the core purpose for which it was set up and that is the purpose it is determined to fulfill irrespective of any external distractions.
Some of these reports suggest insufficient transparency in the sector. Meanwhile, the oil and gas industry is the goose that lays the golden egg. Won't it help if information is put out there when negotiations are taking place so that the public is kept aware before people start whispering campaigns?
Yes, I agree, but the newspaper reports were saying that the assets were sold, which is totally wrong and they mixed up a lot of things as they also mentioned the Shell sale to Seplat.
But why are the ministry and NNPC not keeping people informed on a regular basis, because people are only misinformed when there is inadequate information in the public domain?
I think the only way to do that is if there is an arrangement where either on a quarterly or monthly basis things are put on the table. For instance, for every quarter, NNPC and its subsidiaries take the priority transactions or projects that they have handled in that period and have a round table open discussion. This can also be made available on the company's website. But that would require a complete revamp of the NNPC public affairs department.
Okay, let's look at the availability of products. A litre of diesel is about N200 and kerosene is about N350 and all this happened under your watch as minister. How can you justify this?
No, it is not true. In all honesty, I saw that in the newspapers, I think last week, and I called the GMD immediately, and he came back and said that it was not true that DPK (kerosene) had hit N350 per litre. Also, since we had been on this issue, we actually had people going around, and the highest that was recorded was almost N200 for kerosene, which was what the GMD told us at the time. But it was nothing close to N350.
We fought this issue on kerosene and diesel, but there are a number of things again we have been very careful about. You know that in Nigeria, the DPK that we bring in is exactly the same specification as APK (jet fuel); whereas in most countries, DPK, that is household kerosene and aviation kerosene, have different specifications. But in this country, it is the same and you know what that means. We were trying to combat the problem of retailers selling above what they were given at the subsidised rate. We give at a certain subsidised rate, and the retailers resold at out at a different rate, which means that the profit margin is extremely high.
Is the margin not so high because there is a demand, supply gap?
The moment the crisis hit the market, we tried to intervene to close that gap. In fact, not long ago, another cargo was given to IPMAN (independent marketers) so that independent marketers would go and distribute. We had given the go – ahead for the market to be flooded like five to six weeks ago to try and crash the prices because it is a problem that the president is worried about.
And what about diesel? You came in as minister at the time diesel was between N80 and N100.
The truth of the matter is that marketers such as Zenon have been importing diesel. However, the allocation quota for diesel has not been filled for quite some time. So, if you are supposed to bring certain amount of diesel into the country and you don't, then we would have a problem and the price will rise, which is why we are trying to flood the market with diesel. But we keep falling short of local requirements. So there is actually a shortage of diesel out there and prices have been going up. Twice I had to sign approvals for NNPC to bring in cargoes to try and ensure that we keep down prices, and our major concern was that the 35 days reserve must be available to safeguard the economy. But of course, when you sign approvals, it takes time for the cargo to come in and by the time the cargo comes in, your reserves may drop to 15 days or less, which means we are already in a situation where diesel is becoming scarce in the country and that raises prices. I agree that it is a delicate issue, but we have been grappling with the situation. But the only solution for all this is whether we like it or not as a country, we would have to go through deregulation. The current subsidy burden is so crippling and the budget will not be able to carry it for much longer. In fact, the Ministry of Finance had already prepared a forward budget, in the event that we deregulate in the next six months. What is worse is, as we speak, the subsidies that were in place to help the end users are not reaching them. For instance, look at the price of kerosene, the beneficiaries are the middlemen, it is the retailers who are making the profits, so the ordinary person on the street that is suppose to benefit is not benefitting from it in any form. So at this point in time, there is no point for the subsidy. But, politically, it is an extremely sensitive issue and the unions are still against it, so it is not what you can just come and dump like the military. It would require going into talks, negotiations, discussions and ways and means of trying to mitigate the effect on the end users, particularly in terms of transportation costs, as higher transportation costs translate to a higher cost of living and so on.
But it is speculated that the landing cost of diesel is about N100, but NNPC sells for N70, thus creating avenue for arbitrage and this was done to raise campaign funds for the elections and this persists long after the elections are over.
Not to the best of my knowledge. In fact, this is the first time I am hearing of this. I see the breakdown of landing costs and what diesel is sold for, unless I was being given the wrong figures.
On the PIB, you sounded optimistic when you met journalists in Lagos last month. What happened along the line?
Then again, the senate president had mentioned both to me and to the president that the bill that he saw at the Senate had given him grave concerns because several aspects of the bill had been glossed over and not thoroughly addressed. Yet, that bill had already been laid before the Senate and when it has been laid, you cannot take it away to amend. So I told him if that bill was the one to go forward for passage, then we are finished.
What went wrong with that one?
The fiscal regime, especially for gas, had not been touched at all. In fact, the regimes were not just workable and they were actually punitive even to our own indigenous operators; that was one aspect of the bill that had a problem. And if you can't deliver the right gas, you are in trouble. The fiscal regime for offshore drilling was not too bad because we went over them a couple of times, but you know they did not even look at ultra deep drilling and this is what Angola just sold, put a number of very juicy blocks and did very well from that. So when we looked at the ultra deep offshore drilling, we agreed that it has to be dealt with. Otherwise, why would you promulgate a bill into law and you haven't taken that into consideration? So that was another major issue. Also, the commercialisation of NNPC was completely superficial. So what I had to do was to disband the inter-agency team responsible for commercialisation of the corporation and which was liaising with the assembly because the rancour was becoming too much. Then I had to set up a very high-level committee made up of people like Austin Olorunsola and other people who had a lot of understanding about the workings of the sector. With this, we had about 14 people of high calibre and they did a fantastic job on several aspects of the bill, including the commercialisation of NNPC. Can you imagine that something as fundamental as the commercialisation of an enterprise, which is being restructured to operate along commercial lines, and you haven't talked about how funds will be raised and revenue disbursed? Instead, what we had were allocations from the federation account in the bill. Similarly, when I looked at the role of the minister in the PIB they have right now, I saw there was no point to even have a minister; we might as well have a director general to head the sector. Those were some of the issues we noticed that came up with the PIB.
(Cuts in) You should have brought in consultants to assist the National Assembly. Obviously, they were completely out of their depth and it also has to do with the level of understanding of some of these technicalities in the PIB.
We actually did. The senate consultant, in fact, when this committee was set up, we brought him to also work alongside with us and them and he was very good.
What can be done to salvage the bill at this stage if several important aspects have not been properly addressed?
When we looked at it with Oniwon, I briefed the president, having seen that the outgoing members had left us with this messy document. Indeed, if we did not have people as solid as Oniwon, and we did not look over it and do a thorough job, there would have been big trouble. But the problem now is that what was laid before the Senate was the original document; so I sat down with the senate president and gave him the amended copy from the House of Representatives and went over the major sections that we had reviewed. As such, it is the amended copy with the required input that is before the House of Representatives, which at least means that we are covered there, because at the end of the day the two houses would have to harmonise both versions. Now, since the senate president has the amended version, but they cannot be put into the document at this time, it can still be amended at the point of harmonisation. I also think Senator Bassey Otu, who was the chairman, House Committee Petroleum (Upstream) in the sixth assembly, but is now in the senate, presumably will be in the Committee Upstream for the Senate. With his depth of knowledge from the House of Representatives, hopefully they would finish by the fourth quarter since they are taking it from where they stopped.
There is this talk that you came into the ministry with a mindset to change the status quo, and other stakeholders were not very comfortable with it. How true is it that the multinational companies are short-changing the country by lifting more than what is reported?
I think the question is better directed to Austin Oniwon and his operational crew. In all honesty, I am sure he would debunk some of this and there are other things which I am aware of and we have discussed. But I think it is his place to go over that with you in detail. Most of the things you mentioned now are extremely operational, some of them are very sensitive and I think Oniwon and his team should discuss that with you. But let me say for the record, when I came in it was said all over that I was coming from a multinational and that the multinationals were going to benefit more than they had benefited in the past. But I think that the opposite has actually been the case, fortunately and unfortunately. But I do know how multinationals work. My father was one of the first five Nigerians hired by Shell in the 50s and we know exactly how they work. He was also the first Nigerian to take Shell to court in a landmark case in Port Harcourt in those days over apartheid practices in West Africa. So, I have known them for a long time and I think they probably had it tougher with me than ever before and this is because we finally decided that we cannot continue to allow them to ride us roughshod. It is because our system has continued to remain disorganised in general that they have come in, they actually feed on the disorganisation of our system and they have done very well over the years with that. And I guess it is very difficult to put your feet down to refuse multinationals and other major cartels; unless you have certain support, you cannot do certain things unless you are supported. And of course, if it is the pecuniary interests that are your concerns, obviously that is the way you are going to make money from those things; you will not make money from giving oil assets to NPDC, certainly not. But you cannot even do all this if you don't have the strong support of the president because as they come to you for those things, they also go directly to him every time. As such, if as minister you do not stand firm, then we are in trouble. I am not saying this to fault anybody, but the truth of the matter is that you cannot fight a gang unless you have a very strong support system. However, I think these other details that you are asking for will be better covered by the GMD.
What about the state of the refineries?
Of all the ministers, not just of petroleum but all the ministers, you appeared to be the most divisive, and you elicited extreme passions and reactions. What do you think led to all these? Also, there has been this inordinate media campaign for the past couple of weeks; we could call it a job campaign, which we find baffling. What is behind all this?
I don't think it is a job campaign for me, because I think that there has been a major campaign against me, and the truth of the matter is if people come out and throw allegations that are in essence false, then they must be corrected. Yes ,certain things may have happened, but they were not factually put across, just like some other newspaper reports. Whether you like it or not, you begin to see reactions here and there. But I am not in control of the media, though I may be aware of some of the articles put out in my support. However, many of them, I just read in the media just like everybody else. For instance, four weeks ago or so, I was informed at the weekend about an advertorial in the papers by some gender organisation, imploring the First Lady to step in and save my office or something strange like that. And somebody called me over the weekend after it was published and asked, what was that all about? I replied by saying I didn't know what it was all about. So the following Monday, I requested for the papers and saw it for the first time. When I get these things, I was at first annoyed because even the quality of what was written there, if you read it, was worrisome to me. But then as I explained to the president because he too saw it, I assumed no such organisation exists. In fact, they cannot exist and they couldn't be so based. Secondly, they said they were friends of Diezani or something to that effect. Well, fortunately and unfortunately, I don't say this with any pride, but everybody who knows me knows that I don't have that many female friends; I actually don't. I can probably think of two, at the most three people you may call girl friends of mine and they have no political inclinations whatsoever. Two, they will be shocked at such adverts and I hardly see them because they are not in Abuja. We may see once in every six or seven months if we can and everybody who comes to my house would confirm that they have never met me with too many females around me. That is just the way I am. And to be honest, in my mind, I function more like a man, even in the office place.
Nonetheless, I would never have considered myself divisive, but because I function the way I do, the way I behave and think, I probably don't exhibit those sentiments that most females do. And for years even in Shell, when I was mentoring younger women, I would warn them that they have to change their mode of thinking. Yet, I try to be constructive in everything I do. If from the way I behave there appears to be divisiveness, I can't tell. Nonetheless, you must remember that I have been put in a work environment that is male dominated. The Ministry of Transportation, for instance, was the largest merger of its time and I don't even know how I got thrown on top of that one, because even the works department was completely a male dominated area, very terrible area. Also, we know what we did, we were given a mandate by the late President Umaru Yar'Adua that there would be no new road construction and that is why when the public keeps cursing me for not constructing roads I kept. The embargo on new roads was because of the debt burden of over N950 billion or so that was hanging on the Ministry of Works at that time and there was no way to pay up.
So the late president instructed me to go over the entire schedule of work, re-do it and come up with a new schedule for roads, a major trunk system for Nigeria, which we did. In fact, we have all the records, everything is there and I went before the budget committee at the end of 2008, those last few months, and fought for extra funding for critical roads because by then we knew what was required having done all this work. We knew what we ought to implement - all our access roads to the ports, all those major roads. So they gave me the money because I gave all the reasons why we needed these things. In the first six months of 2009, every road that was put out by works department, we had put in place and we already had the entire schedule because we put it in the budget for roads construction and rehabilitation including the Benin-Ore Road. All the insults I got on the Benin - Ore Road continue to rankle. First of all, I never cried when I inspected the road. I don't know how the crying things came up and I felt so insulted. What actually happened was I stood under the rain and I was very passionate during my comments on the state of the road and the next thing one paper said I had cried. First, I thought it was one erroneous report, but before I knew it, it was everywhere.
But you did not deny it?
That's because I saw only one report at first, and I didn't think it was that important only for me to see it everywhere and by then it was too late; following which the media and the public started using it to even insult me, stating that after I stood there and cried I couldn't do anything to fix the road. Meanwhile, if you know the amount of manoeuvring I did to get funding because we came in using somebody else's budget, so we took money from existing contracts and used it to fix those portions of the road that were causing people sleepless nights on the road.
Putting issues in perspective, and looking back at your period as the Minister of Petroleum Resources, what do you see by way of achievements?
At the same time, we were looking at the situation of the power issue and gas supply and sustainability. So we went through the whole hog, pulled out the gas masterplan, the costing, gas-to-power schemes, gas-to-industry which we already knew and we worked through all these and delivered them. Operators were very pleased that we worked through the gas supply tariff regime in conjunction with the World Bank and everybody was very pleased. Then we worked through the historic gas supply purchase agreement which we put in place and rolled out, they were all very pleased with that too. I kept saying to the GED Gas & Power that what we must do is to keep the sustainability of gas going forward both for power plants and for industrial concerns as well. I impressed it on him that while we were doing that, how could we impact commercially on the lives of people on the street? Right now, it is through employment generation via industrialisation. So our goal was to be able to provide petrochemical and fertilizer plants with gas from the central processing facilities as envisaged under the gas masterplan. As a result, we spent a lot of time negotiating these things, we even went to Procter and Gamble as possible off takers and they are still negotiating with us. It took us about seven months to negotiate, but when you put all these things together based on the agreements signed for the central processing facilities that will make gas available to off takers, we will be talking of up to a million jobs created across the board for Nigerians.
In addition, in order to ensure that the north was not left out in this whole issue, since our major reserves are obviously Niger Delta-based, we actually put a lot of efforts and funding into the inland sedimentary basins and acquisition of data in those areas and Professor Ajakaye from all her findings predicted that within 24 months, the government would strike oil and gas in the Chad basin. This includes the Benue Trough along with other inland basins. Even from all the activities we undertook, we were able to create 3,000 jobs in the sector, especially through the implementation of the Local Content Act.
You talked about a licensing round when you came to office, what became of this?
I wrote to the president about it, but he felt we should exercise patience and attend to other issues first. He, however, has indicated he would be prepared to approve it in this new administration, so I assume that that will be handled within the next couple of months.
Finally, would you like to come back as minister?
Well, I always say that God does as God wills. I have said that all my life - God should do as God wills, what God wills is essentially then my will.
NUTSHELL:
This interview is quite revealing, interesting and insightful for all the right and wrong reasons. There is so much going on in the Geopolitical space called Nigeria. The Petroleum Industry Bill is currently dead in the waters; there is so much furore over the recent involvement of Septa/ Seven Energy in some ''assignments'' with respect to some Oil Mining Licences. What are the intricacies of the policy space within the Nigerian Oil & Gas industry today? Will the Petroleum Minister return for another term? All sorts of questions. This interview is a must read.
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