Firms get December deadline on bitumen exploitation
From Niyi Bello (Akure) and Abiodun Fanoro (Lagos)
TWO firms, which won the bid for commercial exploitation of Nigeria's vast bitumen deposits in four states have uptil December 2004 to move to site.
If the companies fail to make meaningful progress by the expiration of the ultimatum, the Federal Government has vowed to revoke their licences.
The Minister of Solid Minerals Development, Mr. Odion Ugbesia, gave the hint at the weekend in Akure, the Ondo State capital. He said that the two consortia should "either move to site or move out completely."
The companies are Bitumen Exploitation and Exploration Company of Nigeria (BEECON), partly owned by the Ondo State government and NISSANDS.
But in separate interviews with The Guardian, the Ondo State Governor, Dr. Olusegun Agagu, his deputy, Chief Omolade Olateru and the Secretary to the State Government (SSG), Dr. Olusegun Mimiko, blamed the delay in the project's take-off on paucity of funds, investors' apathy and the violence in the Niger Delta region.
Some officials of the companies also corroborated the Ondo principal officers' positions. They said they were unable to mobilise to site because of absence of geo-physical data on the bitumen blocs and non readiness of investors to commit their funds to the project.
In the agreement which the two firms reached with the Federal Government during the bidding process, they accepted to begin full commercial exploration of bitumen within six months. They were adjudged by the Bitumen Project Implementation Committee (BPIC) as possessing the needed technology and financial capacity to execute the project.
If the government revokes the license as threatened by Ugbesia, the companies will forfeit their non-refundable sign-on fees of $1 million (N132 million).
The blocs are located at 307b and 307c of the 120 square kilometre bitumen belt in Lagos, Ogun, Ondo and Edo States.
Each company has also paid $100,000 (N13.2 million) to the BPIC for comprehensive data on the bitumen belt.
The Guardian learnt that the committee had provided the companies with an elaborate set of Environmental Baseline Studies (EBS) comprising social and scientific facts on the communities and the flora and fauna of the deposit area, which formed the basis for the mandatory Environmental Impact Assessment (EIA) that the companies are expected to conduct before exploration.
Ugbesia, who handed down the ultimatum to representatives of the consortia, said everything had been taken into consideration before the government gave them the deadline.
His words: "We have been monitoring the two companies that won the blocs, NISSAND and BEECON and we have given them a deadline of December this year to begin to show appreciable progress in the area of actual exploitation of bitumen, failing which government will be left with no choice but to revoke the contracts.
"But we are here because we have to do a periodic assessment of what they have been doing before we take any step. The companies have no choice, they either move to site or move out completely," he stated.
Asked whether the government was doing enough to assist the companies, the minister said that "we gave everybody what was at our disposal at the time.
"Those who bidded at that time bidded to the specification that was laid out by government. One, you must have technical competence, two, you must have financial competence and three, you must show knowledge of the industry.
"They claimed at that time that they have all of these and it was on the strength of these claims that they were given these blocks.
"If they now turn around to say we don't have money or that we have not found good technical partners, then they are telling us that they deceived us into getting these blocs. I hope that is not the case.
"And if they don't meet up by December, we will certainly withdraw their licenses and of course, go back to the drawing board," he insisted.
Governor Agagu has observed that "it is cheaper to produce oil than bitumen. Bitumen production is expensive and it is a marginally profitable business."
Agagu said that it cost almost 10 times what it took to produce a barrel of oil to produce a barrel of bitumen.
Mimiko also said that bitumen exploration was capital intensive.
The two bitumen companies, he explained, were still looking for technical and financial partners.
The government scribe noted that the project was unattractive to investors because of its long gestation period.
Similarly, Olateru attributed the poor response of foreign investors to the poor investment climate in the country occasioned by what he called "incessant strikes and social unrest and tension in the Niger Delta region".
He said no investor was ready to invest his capital in a volatile environment like the Niger Delta.
