Nigerian President Muhammadu Buhari has reversed his support for Seplat Energy to acquire ExxonMobil’s local joint venture, in apparent recognition of the regulator’s objections.
Before Buhari was against it, he was for it.
Seplat, on August 8, said it had received a letter from Buhari – in his capacity as Minister for Petroleum Resources – giving consent to the deal. This would see Seplat but the entirety of Mobil Producing Nigeria (MPN) from Exxon.
Seplat set out the deal on February 25 this year. It agreed to pay $1.283 billion, with another contingent $300 million, in the deal.
A statement from Nigeria’s president said the approval was given in light of the “extensive benefits” for the energy sector and the wider economy.
“The president, in commitment to investment drive in light of the Petroleum Industry Act, granted consent … and directed that the approval be conveyed to all the parties involved,” it said.
The Nigerian Upstream Petroleum Regulatory Commission (NUPRC), in a statement on August 8, insisted it was the sole authority responsible for approving such a deal. The process is a purely regulatory one, NUPRC said, and the deal was still off.
Communication challenge
Buhari, on August 10, changed his mind and agreed with NUPRC. A presidential spokesman told the Premium Times that the president had reversed his decision. There had been a misunderstanding, he said, because of a lack of communication between agencies.
“Having looked at all of the facts with all of the ramifications, the president decided the position of the regulator is to be supported”, Garba Shehu said.
Further clouding the issue, allegations of corruption have emerged around Seplat’s deal. Persecondnews said Buhari had ordered an investigation into a reported $100mn bribe.
Seplat has denied the allegations. Talk of impropriety, it said, is “wholly untrue”. The independent said it would carry out legal action against any parties involved in spreading false information.
The impact on Seplat from a delay, or cancellation, would be minimal, Fitch Ratings said.
“Fitch believes that sales and purchase agreement as well as all financing for the acquisition remain in place and that the transaction can be concluded as soon as the arbitration process concludes,” it said. Should the deal not go through, Seplat would regain its $128mn deposit.
Updated at 10:42 am with Fitch comment.