$24bn crude oil swap had no contractual agreement – Reps

Facts emerged that there was no official contract signed for the $24 billion crude oil swap implemented by Nigerian National Petroleum Corporation (NNPC), Duke Oil and Transfigura between 2011 and 2014.
According to the committee, about $27 million taxes and levies are owed by the companies involved in the crude oil swap trading agreement within the period under review.
In his testimony, Austin Oniwon, former NNPC Group Managing Director confirmed that over $3 billion indebtedness of NNPC makes it insolvent in 2010 as announced by former Minister of State for Petroleum Resources, Remi Babalola.
Recall that Babalola was sacked few days after the announcement, following the internal crisis trailing the insolvency’ report.
While responding to questions on the oil swap for refined petroleum products initiated by the House of Representatives Adhoc Committee chaired by Zakari Mohammed, Oniwon noted that the adoption of the crude oil swap was necessitated because “our cash flow was in trouble and we couldn’t service the Federation Account and our suppliers.
“As management, when you are cash-trapped you look for cashless system available,” adding that NNPC paid for the 445,000bpd crude oil for the refineries, out of which 150,000bpd was approved for Swap arrangement.
He also disclosed that all the contractors/companies involved in the oil swap were under obligations to pay all taxes and levies to government in the course of executing the contract as stipulated in Article 15 of the agreements signed by both parties.
Oniwon told the committee that he obtained the approval from the former Minister of Petroleum Resources, Diezani Alison-Madueke for the trading of the 445,000 barrel per day of crude allocated to the refineries, adding that only 150,000bpd were approved for oil swap arrangement.
While responding to questions on the approval limit as NNPC Group Manging Director, Oniwon disclosed that it was $10 million, and that he required no other approval either from Federal Executive Council or NNPC Board nor the Minister to convert the 150,000bpd crude oil to petroleum product through the three oil marketers.
Oniwon also disclosed that he wrote in 8th June 2012 for the suspension of the oil swap, as the petroleum products were sufficient, in order to avoid paying demurrage.
Also speaking, Renald Stanley, ex-PPMC Managing Director explained that the $3 billion debt profile
The crude oil and petroleum products reside with NNPC adding that the Corporation has the records.
He explained that the $3 billion debt hangover spanned over number of years and the records of the accrued debts are with NNPC.
On his part, Andrew Yakubu, former NNPC Group Managing Director who serves between 27th June 2012 to 1st August 2014, confirmed this.
Yakubu, a trained refiner and Manging Director of Warri refinery said all the refineries were working under his watch and put on-stream.
He noted that the Corporation was able to recover Port Harcourt to Aba, Warri to Benin, Kaduna, recovered Gusau, Suleja, and commissioned Benin depot, but a major challenge at Arepo has been unabated till date and got crude to Kaduna refinery.
While reacting, Zakari Mohammed, who noted that the committee does  not intend to witchhunt any person or company, directed all the past NNPC Group Managing Directors to provide copies of the approval given by Alison-Madueke for the oil swap, copy of recommendations of the Adhoc Committee that reviewed the oil swap in 2014 which was set up by Andrew Yakubu.
The Committee also demanded for the Presidential approval which increase contract approval level of NNPC Group Managing Director from N100 million to $10 million.
The lawmakers who raised alarm over breach of Public Procurement Act, alleged that the Duke Oil which as third party in the crude oil trading was merely a “laundering pipe”.
They observed that the award of the contract above N100 million was a breach of the Procurement Act,
In her submission, Esther Nnamdi, PPMC managing director, explained that PPMC is looking at how to recover the penalties following the default in the obligations of delivering petroleum products for the lifted crude oil, adding that the products have been delivered.