Recent news reports indicate that the House of Representatives (the lower chamber of the Nigerian National Assembly) is set to investigate the Minister of State for Petroleum Resources, Dr. Ibe Kachikwu, over alleged irregularities in the on-going renewals of oil mining leases (“OMLs”), especially with respect to the early renewal of some OMLs. The allegation of irregularity was however refuted by the Ministry of Petroleum Resources (the “Ministry”) which posited that the early lease renewals embarked upon by the Ministry was to boost the earning potential of the Federal Government of Nigeria and also encourage increased investment by OML holders. The Ministry maintained that there are no irregularities associated with any lease renewal undertaken by the Ministry and the Department of Petroleum Resources.
An interesting question which arises from the above exchange between the House of Representatives and the Ministry is whether the Minster of Petroleum Resources (the “Minister” – currently President Muhammadu Buhari) has the statutory powers to embark on early renewal of OMLs? We will consider this question below.
The Nigerian petroleum industry is primarily regulated by the Petroleum Act Cap P10 Laws of the Federation of Nigeria, 2004 (the “Petroleum Act”). Under the Petroleum Act, only the Minister is empowered to grant the rights to explore, prospect and mine for petroleum in Nigerian. In addition, the Minister is also responsible for renewing the rights granted. Specifically, Paragraph 13(1) of the 1st Schedule to the Petroleum Act (which contains provisions regarding the renewal of OMLs) provides as follows:
“The lessee of an oil mining lease shall be entitled to apply in writing to the Minister, not less than twelve months before the expiration of the lease, for a renewal of the lease either in respect of the whole of the leased area or any particular part thereof; and the renewal shall be granted if the lessee has paid all rent and royalties due and has otherwise performed all his obligations under the lease.”
A literal construction of the above provision of the Petroleum Act would suggest that while an OML holder intending to renew its OML must apply for the renewal at least 12 (twelve) months prior to the expiration of the OML, the OML holder is not prevented from submitting an early application, for example, 24 (twenty-four) or 36 (thirty-six) months prior to the expiration of the OML (which early time frames would fall well outside the realm of the absurdity). In addition, the Petroleum Act does not restrict the Minister from granting an early renewal of an OML.
From the foregoing and in line with the rule of Nigerian law regarding the construction of statutory provisions that what is not expressly prohibited by a statute is impliedly permitted, the only reasonable conclusion (in the absence of absurdity) is that the early lease renewal programme implemented by the Ministry is not contrary to the Petroleum Act.
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