Reps Probe: Nigeria Loses $8bn Yearly To Crude Oil Swap

Adesuwa Tsan And Edegbe Odemwingie

Nigeria loses a staggering $8 billion yearly to the Crude Oil-Product Exchange, otherwise known as crude oil swap arrangement.
This was revealed at a joint House of Representatives Public Hearing into alleged shady transactions between the Nigerian National Petroleum Corporation (NNPC) and two top oil companies in Switzerland, Vitol and Trafigura.
In the crude swap deal, oil trading companies are allowed to lift crude oil in exchange of petroleum products such as petrol, diesel and kerosene.
The joint House Committees on Petroleum Resources Uptream, Downstream and Justice conducting, the probe observed that in most cases, some of the companies involved lift crude oil without commensurate product being supplied.
According to documents obtained by LEADERSHIP from the committee, the NNPC allocated 445,000 barrels of crude oil per day to the following companies: Vitol Ltd, Trafigura, Mercuria, Glencore, Taleveras  Nigeria Ltd, Sahara Energy Ltd, Etenal Oil and Gas Ltd, Aiteo Nigeria Limited, Ontario Oil and Gas and Rahmaniya Oil and Gas.
The joint committee remarked  that Nigeria loses $8 billion yearly in under-delivered products from the crude oil swap arrangement.
Again, based on a report submitted by the Nigeria Extractive Industries Transparency Initiative (NEITI) and obtained by LEADERSHIP, four of the oil trading firms “under-delivered” products in 2011.
They are: Trafigura (173,786,600 litres); Trafigura (654,440.7 litres); Taliveras (152,308,878 litres); Aiteo Nigeria Limited (193,046,590 litres) and Ontario Oil and Gas (180,278,732 litres).
The total under-delivered products according to NEITI amounted to 500,075,239.3 litres in 2011.
The crude swap deal based on the report from NEITI is a drainpipe as Nigeria has lost huge revenue. It was also alleged that some of the oil trading companies owed the NNPC products worth over $800 million.
It was further alleged that Duke Oil Company (a 100 per cent subsidiary company of NNPC) was brought in as a middle player to protect some of the local companies being used in the deal.
However, the NNPC in a presentation at the Public Hearing stated that the crude oil-refined products exchange agreement with Duke Oil Company started in February 1, 2011. PPMC allocates 90,000 barrels of crude oil to Duke Oil Company in exchange for the delivery of refined products equivalent to value of the Crude Oil.
According to NNPC Duke Oil Company operates and manages the swap arrangement my loading three cargoes through its nominated operators Messrs Aiteo Energy Resources Ltd, Ontario Oil and Gas Ltd and Taleveras Group. Each company handles 30,000 barrels per day crude oil contract which represents one cargo of about 950,000 barrels per month and delivers an equivalent value of refined petroleum products in cargo sizes of 27,000MT tto 38,000MT, or as maybe agreed by both parties on behalf of Duke oil.
The NNPC stated that at the time of the contract to Duke Oil in 2011, the company did not have sufficient capacity to operate the contract. It therefore subcontracted the 90,000bpd to the nominated operators Messrs Aiteo Energy Resources Ltd, Ontario Oil and Gas Ltd and Taleveras Group to operate the contract at the rate of 30,000 barrels per day per company.
Berne Declaration:‎ $6.8 Billion Oil Scam
Meanwhile, the NNPC yesterday opened up on its alleged shady transactions with the Swiss oil firms, insisting that the loss of $6.8 billion (as alleged in a 2013 report) in its transactions with the Swiss oil firms was not a “remote possibility”.
A November 2013 report titled “Swiss Traders’ Opaque Deals in Nigeria”, published by Berne Declaration, a Switzerland-based non-governmental advocacy group alleged among others that Nigeria loses yearly “billions of dollars” as large volumes of oil are exported below the market price, and the subsidy scheme for imports of refined crude oil products is systematically defrauded.
The report accused Swiss firms, Vitol and Trafigura, of colluding with NNPC to siphone subsidy payments to the tune of $6.8 billion in two years, an allegation a joint House of Representatives Committee yesterday opened an investigative Public Hearing to verify.
Speaking at the House hearing, NNPC Group Managing Director, Andrew Yakubu at debunked the claim by the Bernes Declaration that the NNPC in collaboration with Swiss Oil Trading Companies disposed the country’s crude oil at prices lower than market value.
“We submit that our pricing strategy is aligned to international best practice in the industry. Our prices are based on a reference to the bench mark crude Brent whose prices are published by Platts for the international trading community,” Yakubu told the joint House Committe probing the NNPC transaction.
The NNPC GMD said the corporation’s pricing strategy apply to all buyers of Nigerian crude based on the terms prescribed in the General Sales Agreement entered by all parties.
“we see no remote possibility of the loss of USD6.8 billion from sales below market value to the companies described by the petitioners as “Swiss Trading Companies”.
On the alleged sale of 36 per cent of total country’s crude oil to Vitol and Trafigura, the NNPC GMD rejected allegations that the NNPC unduly favoured the Swiss firms.
He said by the corporation’s 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% of the total lifting as against 36% 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.”
He said the selection of buyers of Nigerian crude are done on transparent and competitive basis that seeks to establish financial and technical capabilities, promotion of Nigerian Content and general quality  safety assurance.
On the allegation by Bernes Declaration that 100 per cent of Nigerian crude are disposed through Private Trading Companies rather than the Corporation selling directly to the market with attendant loss of trading margins, the NNPC GMD said the country’s marketing strategy of the disposal of Nigerian crude is sale on Free-on-Board (FOB) basis.
He said the model allows the transfer of delivery risk to off-takers at the loading port and is standard practice by most National Oil Companies (NOCs).
On the sale of un-utilised Crude Oil at knock down prices to Swiss Companies through the Crude Oil-Product Exchange (“Swap Arrangement”), the NNPC GMD stated that the claims by the Bernes Declaration are “baseless and without material substance”.
He requested the House Committe to set aside the allegation “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”.

Leadership

SSS Interrogates Two CBN Directors In Bid To Nail Lamido Sanusi

The State Security Services (SSS) has interrogated two directors of the Central Bank of Nigeria, as officials of Nigeria’s secret agency intensify effort to nail suspended CBN Governor, Sanusi Lamido Sanusi.
The invitation to the two CBN directors came a day after the Goodluck Jonathan administration withdrew the security detail of the ousted CBN governor. Mr. Sanusi, who is believed to still be in Lagos, has not stopped talking to local and foreign reporters since his removal last Thursday.
A source at the Presidency told SaharaReporters that Mr. Jonathan was upset about Sanusi’s outspokenness, especially the CBN Governor’s granting of interviews to the foreign media which continue to see his ouster as an audacious attempt by the government to cover up the missing $20 billion. Mr. Sanusi had told a panel of the National Assembly that the Nigerian National Oil Corporation had not deposited $20 billion of Nigeria’s crude oil earnings with the CBN. The embattled CBN Governor reportedly believes that the missing money was pocketed by cronies of President Jonathan.

The SSS has emerged as the weapon of choice in the government’s reprisal against Mr. Sanusi. A source at the Economic and Financial Crimes Commission (EFCC) told SaharaReporters that the anti-corruption agency was reluctant to get involved in the Sanusi case for fear of being accused of serving as an instrument used by Mr. Jonathan and Petroleum Minister Diezani Alison-Madueke to cow Mr. Sanusi into submission.
Some agents of the EFCC have also reportedly received documents that detail suspicious transactions. The documents reportedly disclose how some cronies of Mr. Jonathan moved out huge sums of money from the NNPC crude sales.
Tomorrow, SSS agents are scheduled to interview the two CBN directors who received summons today.
A source at the Presidency revealed that the interrogation of the directors became necessary after it was discovered that the Financial Reporting Council of Nigeria (FRCN), whose report Mr. Jonathan relied upon in suspending Mr. Sanusi, had accepted some N500 million from the CBN and a few commercial banks to build an institute. Also, the council’s executive director, Jim Obazee, has a pending petition from an Abuja-based Public Interest Lawyers League (PILL). The petition accuses Mr. Obazee of sexually harassing a married Nigerian woman, Abimbola Patricia Yakubu.

TheParadigm

Dad Delivers Baby After Doctor, Nurse Flee

By Katie Moisse

A Boynton Beach, Fla., hospital is staying mum after a maternity ward mix-up that left a dad to deliver his own daughter.
Zaheer Ali says he and his laboring wife, Indira, were abandoned by hospital staff when another patient needed an emergency C-section.
"My wife was screaming," Zaheer Ali told the Palm Beach Post. "The nurse says, 'You have to wait.'"
The Alis arrived to Bethesda Hospital East Saturday night and were given an induction drug to speed up the delivery, according to the Post.
Indira Ali's labor was moving along quickly. When a patient down the hall needed the C-section, her doctor stopped the induction drip to stall the birth until she could return, the Post reported.
But baby Aaliyah couldn't wait. She was born weighing 6 pounds, 3 ounces, with just her mom and dad in the room.
"It must have happened very rapidly, because I was only in the C-section for 30 minutes," obstetrician Dr. Elana Deutsch told the Post, adding that a nurse should have stayed with the couple but was likely "nervous" about being there alone. "By the time she [the nurse] was back in the room, the baby was in the bed," Deutsch said.
Deutsch returned to the room just in time to cut the umbilical cord, the Post reported.
"The patient was obviously very upset," she said. "I was very upset."
Study Raises Concerns That Induction Drug Pitocin May Harm Babies
Hospital spokeswoman Lisa Kronhaus declined to comment on the ordeal, citing patient privacy rules, but stressed that mom and baby are "doing very well."
She also confirmed to ABC News that the family was offered "special accommodations" at the hospital but said she couldn't say whether they were still there.
ABC News was unable to reach the family for comment, but Zaheer Ali told the Post that their treatment was "wrong."

"The hospital is saying, 'Sorry,' but I just feel it's wrong," he said. "It's a hospital. There are supposed to be nurses and midwives. A nurse should be there with you."

abcNews

Multinationals, NNPC, DPR Responsible For Fuel Scarcity – NUPENG

Michael Oche

Nigeria Union of Petroleum and Natural Gas Workers (NUPENG) yesterday in Abuja yesterday blamed multinationals, the Nigerian National Petroleum Corporation (NNPC) and the Department of Petroleum Resources (DPR) for the current fuel scarcity being experienced across the country.
Speaking in Abuja, NUPENG’s president, Achese Igwe, also threatened to stop fuel distribution and shut down the nation’s oil sector over alleged unfair labour practices and other nefarious activities by major oil marketers and multi-national oil companies in Nigeria.
Igwe claimed that the activities of oil marketers and multi-national companies amounted to economic sabotage and if not checked would lead to unrest in the sector, calling on the government to quickly intervene before it was too late.
He refuted insinuation that the current scarcity of petroleum produce is being caused by the labour union, and noted that the continuous importation of petroleum products in the country, contrary to the advice by the labour union that government revamp the refineries, was the reason for the scarcity.
He said: “Nigerians deserve to know the actual cause of the scarcity. It is very unfortunate that it is only in the country that refineries build with tax payers’ money are not running. Why are multinationals not encouraging  the building of refineries in the country. They are the ones advising the government on the continuous importation of petroleum products.”
Meanwhile, the Nigerian Labour Congress (NLC) has faulted the supesnion of Sanusi Lamido Sanusi as CBN governor, saying it was flawed and negated due process and the Act establishing the CBN.
The labour unions said Sanusi’s suspension was capable of discouraging future whistle blowers in government as well as casting a pall on government’s fight against corruption, none of which is good for the image of the government at the moment.
In a statement signed by its national president, Comrade Abdulwahed Omar, the NLC said government’s action was negatively pre-emptive and malicious by virtue of the fact that full investigations into the allegations had not been concluded before it removed Sanusi, and also the fact that it had sent to the Senate for confirmation the name of his successor.
The statement reads in part: “We find it intriguing that government and Sanusi could part ways in this fashion. We recall Sanusi’s anti-worker policies/statements and, especially his stance during the fuel price increase protests in January 2012 which was clearly in support of government and the fuel subsidy scammers. To this end, it could be argued he was not really interested in fighting corruption but in seeking the headlines.”

Leadership

N832bn Spent On Fuel Subsidy In 2013 – PPPRA

 

 

Juliet Alohan

The Petroleum Products Pricing Regulatory Agency (PPPRA) has said that it paid a total subsidy claims of N832 billion to fuel marketers under the Petroleum Support Fund (PSF) in 2013.
This was disclosed by the immediate past executive secretary of the agency, Reginald Stanley, while handing over to his successor, Farouk Ahmed, in Abuja yesterday, after attaining 35 years of service.
Stanley noted that the N832 billion paid as fuel subsidy in 2013 was a little lower that the N862 billion paid in 2012.
The former PPPRA boss, in his hand-over remarks, also disclosed that the downstream petroleum industry witnessed total investment inflow of about N70 billion under his watch, adding that the agency was able to eliminate previous manipulation of the bill of lading and made cost savings for government.
While emphasising that the agency underwent strategic reform measures aligned with government’s plan for the oil and gas industry, he said the PPPRA saved N409 billion and N326.57 billion for government in 2012 and 2013.
The savings, he explained arose from the reduction in daily fuel consumption figure from 60.25 million litres per day in 2011 to 39.79 million litres in 2012, while it recorded 42.11 million litres per day in 2013, a reduction of 18.14 million litres compared with the 2011 figure.
“What is spectacular about the 2013 consumption figure is that it showed a modest increase of 5.5 per cent in the 2012 figure in an economy growing at 6.9 per cent per annum. Statistically, gasoline consumption tracks the gross domestic product (GDP) growth very closely,” Stanley said.
Noting that the pruning in the number of marketers, deployment of global tracking of vessels, among others, were part of measures adopted, Stanley said, “today, it has been well established that national consumption is around 40 million litres per day.”
He further appealed to the National Assembly to pass the Petroleum Industry Bill (PIB) in order to sustain a vibrant downstream sector, adding that in the last 24 months many depots and jetties have been built through private initiates, thereby generating thousands of jobs in the economy.
Remarking, Ahmed while thanking government for the opportunity to serve, urged staff of PPPRA to ensure the sustenance of the ongoing reform in the agency, even as he warned against any form of gossiping or sycophancy.
 Leadership

Inter Targets Mikel Obi

Chelsea midfielder John Obi MIkel is a target of Italian giants Inter who are looking for a defensive midfielder to shore up their middle.
Italian newspaper La Gazzetta dello Sport reports that Walter Mazzari has sent his main scout to monitor the Nigerian whose contract at Stamford Bridge lasts till 2017.
Mikel has seen his Chelsea place come under threat with the arrival of Nemanja Matic in January and has also been curtailed by minor injuries.
Rated at 15 million Euros, the prize could be too high for the San Siro club who are also mauling a loan move in the summer transfer window.
Inter will also wait to see if Chelsea coach Jose Mourinho has an interest in signing any Inter player which could result in Mikel being thrown into the negotiations.
Mikel is expected to lead Nigeria’s charge at the World Cup in June and an impressive performance with the Super Eagles would shoot up his profile and asking fees.

Leadership

Why PDP can’t retain Rivers in 2015, by Amaechi

Rivers State Governor Rotimi Amaechi spoke with reporters in Port-Harcourt, the state capital, on the visit of former President Olusegun Obasanjo to the state, the Peoples Democratic Party (PDP) crises, the future of the All Progressives Congress (APC) and the 2015 elections. Excerpts:
Why did you request former President Olusegun Obasanjo to commission your projects?
He was a foremost Head of State and Government that we have had in the country. So, what is wrong in asking him to commission the projects. It was important that he came to have a look at what we have done. Like I told him in the public, we same a common friend and anytime and anytime common friends say what about these things, is Amaechi working, that can be assessed. It was important to bring him so that he can assess things for himself so that next time that question is put forward, he will give them an answer.
Don’t you think that the President will be annoyed that Obasanjo has taken the shine off him by not being invited to commission the projects as the President and Commander-In-Chief?
Today, some governors commission for themselves. Would you take offence when they commission their projects by themselves? I saw Fashola recently as he was commissioning projects. I saw Akpabio as he was commissioning a General Hospital. Why will the President take offence about that? It depends on the choice that the governor makes. I can ask the President or governor to commission projects. My colleagues have invited me to commission projects before in Jigawa. I had an invitation from Yobe. Adamawa has invited me. I don’t think that the President will take offence with that.
Will the commissioning by Obasanjo enhance your profile?
Well, looking at Obasanjo’s status, you will certainly get some benefits by identifying with him. He is a man with this national clout. I was surprised by the kind of reception he got among the people that came out to receive him. There were those that were brought by the organisers. There were those that came on their own hailing him, shouting baba, calling him all sorts of name, baba iyabo, baba this, Olusegun. Some calling him without respect by calling the former President by such name. I can share this with you. He told us how he acquired the name, Mathew. He said that his parents said that he should have a Christian name and when he got to the secondary school, they looked at how long his names were and one has to be dropped and that he decided to drop Mathew and the reason he dropped Mathew was that Mathew was a tax collector. I think you can’t ignore the fact that identifying with such an important character will rub off on you, and I think positively.
Does the likelihood exist that you will return to the PDP, which is the predominant party in Rivers?
You should be careful with your choice of words. How do you know that the PDP is the predominant party? Why can you wait and see whether it is true? You have to be careful. What you assume to be the predominance of the PDP may be the predominance of the manipulation of the elite. It is now that we will source the votes from the down-trodden and then, you can say whether it is a predominantly PDP state or not. I think we should be careful in the choice of such words.
What is likely to be the fate of the APC in Rivers in 2015?
I am not God. Don’t give me such powers.
How about your succession plan?
I leave that to God. Don’t forget the way I was anointed as the governor. Even, the greatest of all Christians never thought that it will happen. There were occasions where I had sat down in Ghana and asked: how did it happen? I started thinking about these prophets who prophesised that you will be governor and I asked, how will it happen? We don’t know. We just wash and see how God does His things. You must take that into consideration. So, there is God’s elements. Then, you do your human planning. But, I am not focusing on human planning. I am focusing on building a party called the APC because there was none some few months ago. That is why we say, if the PDP says that they are the biggest party , the largest party in Africa, I will say APC is the fastest growing party in Africa. No party has grown at the rapid rate the APC is growing. Some few months ago, there was no opposition party in Sokoto. But, the PDP is now struggling to retain its status as the opposition party in Sokoto. It is the same in Kano. It is the same in Kaduna where the Vice President comes from. And the APC is rearing its head in Bayelsa. So, you can see we are the fastest growing party.
Are you saying there is tension in the PDP?
Honestly, the tension in the PDP over the sharing of the loot in Nigeria is enough to put it into crisis. But, look at here now, all of us are at peace with one another.
What is your comment on the NNPC 20 billion dollar controversy?
You heard Asiwaju saying that the NNPC is the ATM of Jonathan. We are not involved. We are not talking about it. We will allow the country to decide.
What does the revelation about the missing oil money portends?
Nigerians should react. The Governors’ Forum has taken a position that he dwindling revenue at he state level is not because of the oil theft, but because of financial diversion.
Would all these your projects be completed before you leave or they would be abandoned, especially the mono-rail?
Where you there when I was interviewing the contractor? Everything about that mono-rail is inside the city of Port-Harcourt. They say they will complete the terminus in October. We will start the power project very soon so that the train will have power to use. The train is built in such a way that, if there is no power, automatically, it will use diesel. You can see the cost. You have power and diesel.

TheNation