Gbenga Komolafe
The Nigerian Upstream Petroleum Regulatory Commission (NUPRC) has made public conditions, including a due diligence request list that exiting International Oil Companies (IOCs) must fulfil for such deals to be approved by the commission.
It listed them as: Technical capacity, financial capability, fulfilment of legal requirements, decommissioning and abandonment, host community trust, industrial relations and data repatriation.
The Chief Executive of the commission, Mr Gbenga Komolafe, had a day earlier argued that the NUPRC was not interested in blocking companies interested in divestment, but would always insist on due process.
On technical capacity, it stated that the successor entity must demonstrate proven and verifiable capacity to operate the asset vigorously and in a business-like manner.
The entity, it said, must showcase competencies and capabilities comparable to or surpassing those of the divesting entity. In addition, all production allocation and cost issues related to unitisation in the case of straddled fields must be resolved, it said.
On financials, the commission explained that it shall assess the prospective successor entity’s balance sheet and financial viability and verify readiness to undertake defined work programme and fulfil required obligations on the assets.
“Due diligence shall be undertaken on potential buyers to assess suitability, alignment with state interests, reputation, investment objectives, and track record etc,” it argued.
In addition, it said that the acquiring entity must be ‘fit and proper’ persons in the eyes of the law and in line with the interest of the nation and must have clear evidence of the resolutions of legacy debts and legal encumbrances must be established and appropriate mechanisms to manage residuals agreed.
In terms of decommissioning & abandonment, it stated that applicable D&A costs must be diligently assessed, and settlement of outstanding obligations must be ensured.
It stated that the commission will ensure that potential exposure of the Nigerian government to decommissioning liabilities is averted.
Also, the commission said it shall assess the status of Host Community Trust Fund obligations and ensure robustness of successor entity’s social inclusion programme in line with the provisions of the Petroleum Industry Act, 2021 (PIA).
“The commission shall evaluate acquiring entity’s adherence to decarbonisation plans and sound Environmental Social & Governance (ESG) principles.
“The commission shall implement a robust assessment mechanism to avert undesirable labour union issues and disharmony arising from the divestment process. Concerned parties shall endorse “Certificate of Settlement” to validate alignments reached on all labour issues (staff welfare, benefits, entitlements as well as disengagement, redundancies, retirement etc.)
“The aim is to ensure the nation averts socio-economic disruptions arising from failure to resolve labour issues that might result as a consequence of and post divestment,” it said.
On data repatriation, the commission noted that it shall ensure that all data mined during the operating life of the asset are repatriated to the National data Repository (NDR) in line with extant regulations.
Emmanuel Addeh
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