Nigeria: Country Earned U.S. $2.13 Billion From Oil Blocks Sales - PTDF

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Vanguard (Lagos)

7 July 2008
Posted to the web 7 July 2008

Luka Binniyat

Nigeria made about $2.13 billion from the sales of oil blocks, otherwise known as Signature Bonus, between 2005 and 2007, which, under the law, ought to have gone to the Petroleum Technology Development Fund (PTDF) says the Executive Secretary of the PTDF, Alh. Kabir Mohamed.

Mohammed, former Counsel to the Aso Villa, who made this known to Vanguard Weekend, however said that, the amount would have been too much for the Fund to handle, as a special arrangement has been made in which $672 million of the Signature Bonus is held in a Special Account called PTDF Reserve Account with the Central Bank of Nigeria (CBN)

Mohammed said that the need not to give all the Signature Bonus to the PTDF was because, when the law establishing the Act was promulgated in 1973, policy makers never imagined that a time will come when sales of oil fields will gross so much.

He said that from the '70s right through the '80s Signature Bonus were between $10 and $20 million dollars.

"But in 2005 alone", he noted, "Nigeria made over $1billion dollars. In 2006, we made $552million. And last year, (2007) $587million", he said.

"Now under the law, all that money was supposed to be given to the PTDF directly", he said. "But the former President (Chief Olusegun Obasanjo) realised that PTDF does not need all that money. He knew the level of our operation, because he was the one giving the approvals. He knew that $1billion was in excess of our need. But the issue now is, 'What do you do with the money?' If you don't give it to the PTDF as required by the law, you will be going against the law; and you cannot give all to the PTDF, because it does not need that amount.

"So there was a dilemma. So a decision was taken at that time to, in the interim, limit the funding of the Fund to 25% of realised Signature Bonus per annum and up to a maximum of $100million. It is an interim arrangement pending the amendment of the law."

He said that the issue of funding of the PTDF has been of major concern to both the past and new administration, noting that a Bill has been drafted that will finally take care of the problem. According to Mohammed, who became the Executive Secretary of the Fund in 2006, the PTDF Bill will form part of the Report of the Oil and Gas Reform Committee.

On the balance of the Signature Bonus, he said: "When President Umaru Musa Yar'Adua came to power, he directed that the Accountants General of the Federation give him the balance in that account. It is called PTDF Reserve Account with the CBN. He gave him a balance of about $672 million.

"The National Assembly wanted to take that money to finance the pre-budget deficit, but the President did not agree, since the Law said that the money belongs to the PTDF", he said.

"The President reasoned that even if the PTDF does not need the money now, one day it may need it. He said that there should be something for the Fund to fall back on. So the money is there, and nobody has touched it" - $672m locked in special account.

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