By Bassey Udo
The demand by the Nigerian Upstream Petroleum Regulatory Commission (NUPRC) for prospective bidders in the forthcoming 2023 Oil and gas licensing bid round to identify the real owners of all leases and license holders in Nigeria is a step in the right direction, the Human and Environmental Development Agenda (HEDA Resource Centre) has said.
The Chairman of HEDA, Olanrewaju Suraju, described the regulatory Commission’s directive as the ultimate decision to further promote transparency and accountability in the Nigerian petroleum sector.
“It is indeed the way to go given Nigeria’s endorsement of the renowned Open Government Partnership, OGP,” the head of the civil society group said.
Declaring support for the upstream petroleum industry regulator in ensuring transparency in the petroleum sector, Suraju said HEDA shared a common vision of transparency and accountability with the Commission in the petroleum sector.
Suraju, further charged NUPRC to call on law enforcement agencies to ensure the full compliance of the operators to provide the required information as directed, and to follow up with the review of the information and veracity of the submissions.
Recently, the NUPRC issued a seven-day ultimatum to all lease and license-holders operating in Nigeria’s oil and gas sector, for them to disclose the real identity (ies) of the beneficial owner(s), the level of ownership, and details of how control is exerted.
The Commission further explained that any notice of change in persons in significant control over a relevant person shall be provided by the relevant person(s) within 30 days of the change using the change in the beneficial ownership declaration form.
In the directive personally signed by its Chief Executive, Gbenga Komolafe, the Commission said the new directive tagged, “Notification No. 1 to All License and Lease Holders in Nigeria on the Requirement for Submission of Beneficial Ownership Information” was to remind them of the need to comply with the global Extractive Industries Transparency Initiative (EITI) standards.
Details of the directive showed that those to be affected included persons with significant control of at least five percent equity holding in the license, and directly or indirectly holding the same percentage of voting rights, among others.
“The Commission hereby requires all entities that apply for or hold a participating interest in an exploration or production oil and gas license, lease or contract to provide information of their owners, including the identity(ies) of their beneficial owner(s), the level of ownership and details about how that ownership or control is exerted.
“Accordingly, all relevant persons are hereby required to provide the information of persons with significant control over them. A person with significant control means any person directly or indirectly holding at least five percent of the shares or interest in a relevant person.
“Or a (person) directly or indirectly holding at least 5 percent of the voting rights in a relevant person, and directly or indirectly holding the right to appoint or remove a majority of the directors or partners in a relevant person.”
In addition, the Commission stated that the significant persons were those otherwise having the right to exercise, or actually exercise significant influence or control over a relevant person; or having the right to exercise, or actually exercising significant influence or control over the activities of a trust or firm, whether or not it is a legal entity.
The directive followed the recent release of the Beneficiary Ownership Register by the Nigerian Extractive Industries Transparency Initiative (NEITI) and the Corporate Affairs Commission (CAC) towards the implementation of the beneficial ownership reporting system in Nigeria.
The system is in line with the statutory requirement for full disclosure of beneficial ownership information in the award of licenses in the extractive industries.
The NEITI is expected to ensure the enforcement and execution of the set standards in the oil, gas and mining industries through its agencies in the sectors.
Recently, Komolafe commended NEITI for its commitment to the promotion of an open and accountable system in the management of extractive resources, saying the NUPRC and NEITI shared a common vision of transparency in the country’s petroleum sector.
Komolafe gave the assurance that the NUPRC was fully committed to working with NEITI to deepen Nigeria’s implementation of contract transparency and beneficial ownership disclosures in the country to ensure the revenues from natural resource assets supported national development and reduction of poverty.
“At the NUPRC, we are implementing the beneficial ownership reporting system, as it is a statutory requirement demanding full disclosure of beneficial ownership information. The Commission is engaging the oil and gas companies to ensure their mandatory compliance,” Komolafe said.
He said the idea was to ensure that citizens were aware of whom they were doing business with or competing against, adding that it would also encourage appropriate stakeholder engagement, as part of Nigeria’s open government action plan.