By Adedapo Adesanya
The Nigerian Upstream Petroleum Regulatory Commission (NUPRC) has reportedly rejected Shell International Plc’s bid to sell its onshore assets to Renaissance in a transaction now worth $1.3 billion.
Reports revealed that the transaction, which needed the green light from the regulatory commission as required by the Petroleum Industry Act (PIA), has been rejected, raising worries about the divestment of International Oil Companies’ (IOCs) assets in the country.
The reason was due to concerns over the buyer’s capability to manage Shell’s assets.
Shell had earlier revealed its intention to divest its full stake in the Shell Petroleum Development Company of Nigeria Limited (SPDC) to Renaissance, a consortium comprising ND Western Limited, Aradel Holdings Plc, the Petrolin Group, FIRST Exploration and Petroleum Development Company Limited, and Waltersmith Group.
In April, the NUPRC established a divestment framework to evaluate applications for ministerial approval of Shell’s divestment plans.
According to Mr Gbenga Komolafe, NUPRC’s CEO, this framework covers areas such as technological expertise, financial standing, legal requirements, decommissioning and abandonment procedures, environmental remediation, labour and industrial relations, data repatriation, and host community trust.
He also emphasised that Renaissance must prove it has the technical capability to efficiently manage the assets in question.
The deal initially announced at $2.4 billion has since dropped 46 per cent to $1.3 billion.
Also raising eyebrows is that the assets have been at the centre of a legal dispute between Shell and local firm Global Gas and Refining Limited.
The local firm has sought a court injunction to prevent NUPRC from endorsing the sale due to several disagreements over contractual responsibilities.
Shell later clarified that it was not selling the onshore assets directly to Renaissance for $1.3 billion but was transferring shares.
The deal has also seen criticisms from a coalition of 40 non-governmental organisations (NGOs), including Amnesty International, which raised concerns over the transaction.
The parties urging that the sale not be approved until Shell’s environmental damage has been thoroughly assessed.
Equally, the Petroleum and Natural Gas Senior Staff Association of Nigeria (PENGASSAN) rejected the sale of Shell onshore assets, saying the consortium, Renaissance, was unknown to it coupled with several allegations.