The state-run Nigerian Upstream Petroleum Regulatory Commission (NUPRC) rejected the proposal of Shell Petroleum Development Company of Nigeria (SPDC) to sign a $1.3 billion deal with the Renaissance Africa Energy Company (RAEC), a Nigerian consortium of five energy companies, local media ThisDay reported.
The NUPRC deemed the RAEC unqualified to manage the country’s oil and gas assets, citing a lack of proven capacity, according to media.
“The truth is that none of them is currently managing up to 50 percent capacity of their current assets. So, if they are not managing their current assets up to 50 percent, why would you now give them even more significant volume of asset to manage?” the outlet's source said.
The government reportedly believes that handing over these assets to an unqualified entity could lead to further losses for Nigeria, especially during a time when increasing oil and gas production is crucial.
“Nigeria could be the loser. Two, another issue is that the seller financing model is not transparent. The seller is also the financiers. It didn’t make sense, and it was quite not transparent because it led to a lot of issues in the past,” an industry source reportedly stated.
Upon successful completion of the $1.3 billion Shell divestiture, the RAEC would have made additional cash payments of up to $1.1 billion, primarily related to past receivables and cash balances in the business, the report added.