NNPC Defends $6bn Swiss Oil Deal

Advertisement

Slide1

Teddy Oscar, Abuja

The Nigerian National Petroleum Corporation (NNPC) on Tuesday defended allegations made by Bernes Declaration that Swiss oil companies, Vitol and Trafigura, accounted for over 36 percent of the total volume of oil disposed by the corporation in 2013.

Andrew Yakubu, NNPC group managing director, made the defence before a House of Representatives’ investigative hearing on the ‘alleged connivance of NNPC with Swiss oil dealers to rob Nigeria billions of dollars’.

Bernes Declaration, a Swiss-based nongovernmental organisation, had claimed that the two companies accounted for over 36 percent of the total volume of crude oil disposed by NNPC.

But speaking before the Committee on Petroleum Resources (Upstream), Yakubu also hinted that local refineries took a significant number of oil.

“By our records Vitol and Trafigura account for 30.7 million barrels out of the total of 341.07 million barrels disposed by the Corporation in 2013 lifting. The lifting of Trafigura and Vitol in 2013 therefore represents 9 percent of the total lifting as against 36 percent reported by the Bernes Declaration.

“Additionally, Nigerian traders collectively account for 98.2 million barrels during the same period. The other international traders, including the Swiss trading companies, account for 61.2 million barrels, while off-shore and the Nigerian refineries took 36.2 and 38.3 million barrels, respectively,” Yakubu said.

Contrary to claims by Bernes Declaration that 100 percent of Nigerian crude oil is disposed by the private trading companies, Yakubu explained that the disposal of Nigerian crude is sold on Free-on-Board (FOB) basis.

In order to meet the NNPC Act mandate to supply petroleum products to the federation as supplier of last resort, Yakubu said: “445,000 barrels of crude oil is assigned to the corporation at international price for domestic refining.

“The corporation disposes unrefined portion of the assignment through direct export or other secondary arrangements, including ‘swap’ to ensure procurement and delivery of refined petroleum products.

“Honourable chairman, we affirm that the claims by the Bernes Declaration are baseless and without material substance and request you to set it aside in its entirety.

“The ‘swap arrangement’ referred to by the Bernes Declaration is a known practice in the industry where equivalent value of product is exchanged for crude oil offtake.

“This is a typical procurement strategy for supply constraint but resource dependant nations to hedge for supply security challenges. It is to be noted that the NNPC delivers the international market value of the crude to the Federation on the basis of the general sales agreement and conditions. There is, therefore, no value loss to the federation.”

In his opening remark, Rt. Hon. Aminu Waziri Tambuwal, speaker of the House, observed that the issue before hand was very important.

“It’s importance is predicted on the fact that outside of the collateral issues of fraud and economic sabotage; as a country, we cannot afford any loss in revenue, given the enormous challenges facing the country.”

In his address, Hon. Muraina Ajibola, chairman of the committee, assured that the committee would undertake the investigation with every sense of seriousness in order to make appropriate recommendations to the House.

It would be recall that a report titled “Swiss traders’ opaque deals in Nigeria” published by Berne Declaration, named two top oil companies in Switzerland, Vitol and Trafigura, as being culpable in the siphoning of subsidy payments to the tune of $6 billion in two years.

The report also mentioned the various methods employed to embezzle the funds such as payment of subsidy money to non-existing importers, hiding behind numerous transactions to make the paperwork untraceable, using of subsidiary companies, among others.

Following the report, the House mandated an investigation into the alleged involvement of NNPC with Swiss oil dealers in deals that cost the Federal Government billions of dollars.

This was sequel to a motion raised by Hon. Abiodun Abudu-Balogun, who drew attention to a Berne Declaration report.

In the motion, Abudu-Balogun expressed worry that there are still allegations of corruption in the Nigerian oil industry, despite all the actions of the National Assembly.

“The new report by Swiss non-governmental advocacy organisation, the Berne Declaration, detailing how the NNPC, in connivance with major Swiss oil trading companies, is draining Nigeria of billions of dollars of revenue through the sale of crude oil below the market value,” Abudu-Balogun observed.


1 COMMENT

  1. This is why it’s hard to understand why President Jonathan has not called for IMMEDIATE investigation, external audit and revamp of the NNPC. Too many skeletons in the closet. President Jonathan’s concern every waking hours of his day is to lift up a country where most of the citizens make less than $2 a day. Nigeria’s youths, please fight for your future that is being destroyed.

LEAVE A REPLY

Please enter your comment!
Please enter your name here