TheCable

The Nigeria Upstream Petroleum Regulatory Commission (NUPRC) has developed a divestment framework to guide the assessment of applications for ministerial consent to the Shell Petroleum Development Company of Nigeria (SPDC) Limited divestment.

On January 16, Shell had agreed to sell its Nigerian onshore oil assets to Renaissance Group, a consortium of local companies, for over $1.3 billion.

Renaissance is a consortium of five companies including ND Western Limited, Aradel Holdings Plc, the Petrolin Group, FIRST Exploration and Petroleum Development Company Limited, and the Waltersmith Group.

Speaking on Monday at the NUPRC-SPDC divestment workshop in Abuja, Gbenga Komolafe, the commission’s chief executive officer (CEO), said the divestment framework has seven cardinal pillars. 

He said the framework would also guide other similar divestments in the country.

Komolafe said the cardinal pillars include technological capability, financial, legal, decommissioning and abandonment (D&A), environmental remediation fund, industrial relations and labour concerns, data repatriation, and host community trust.

On technical capacity, he said the successor entity must demonstrate a verifiable capacity to operate the asset vigorously.

The CEO said the NUPRC would evaluate the prospective successor’s financial viability to carry out a defined programme and fulfill required obligations regarding the assets.

Concerning the legal framework, he said the acquiring entity must be ‘fit and proper’ persons in the eyes of the law, stressing the need for concrete proof of legacy debt and legal encumbrance settlements.

“Applicable decommissioning and abandonment costs must be diligently assessed and ensure settlement of outstanding obligations. Commission will ensure that potential exposure of the Nigerian government to decommissioning liabilities is averted,” he said.

“The commission shall assess the status of Host Community Trust Fund obligations and ensure the robustness of the successor entity’s adherence to decarbonisation plans and sound Environmental Social & Governance 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 a “Certificate of Settlement” to validate alignments reached on all labour issues (staff welfare, benefits, entitlements as well as disengagement, redundancies and retirement, among others).

“The aim is to ensure the nation averts socioeconomic disruptions arising from failure to resolve labour issues that might result because of post-divestment.”

‘ALL DATA MINED DURING ASSET OPERATIONS TO BE REPATRIATED’

On data repatriation, Komolafe said the commission would ensure that all data mined during the operating life of the asset are repatriated to the national data repository in line with extant regulations.

Komolafe, however, emphasised that the NUPRC would remain committed to the free entry, free exit business principle aimed at encouraging investors in the sector.