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Allison-Madueke Approves N4.8tr worth of Oil Swaps Without Contract

Allison-Madueke Approves N4.8tr worth of Oil Swaps Without Contract

Mr. Austin Oniwon,   a former Group Managing Director of the Nigerian National Petroleum Corporation (NNPC), yesterday came a disclosure that a former Minister of Petroleum Resources, Mrs. Diezani Alison-Maduekwe, gave an approval to oil trading companies to swap the nation’s crude oil for refined petroleum products for three years without a contractual agreement.

Oniwon who spoke while testifying before members of the Zakari Mohammed-led ad-hoc committee probing the operations of the swap programme of the NNPC and Petroleum Products Marketing Company (PPMC) disclosed that he got the minister’s approval after the initial one year contractual agreement with the oil companies had expired in 2011 and complied with the directive on the crude oil swap till the end of his tenure on June 26, 2012. The formal contractual agreement on the deal was eventually signed in December 2014.

The leading oil trading companies involved in the deal were Duke Oil Nigeria Limited and Trafigura Nigeria Limited .The oil swap deal’s value and volume were put at $24 billion (about N4.8 trillion at N200 per dollar) and over 45 million metric tonnes between February 2011 and December 2014.

Oniwon, however, maintained that he was in support of the crude oil swap arrangement in view of the need to save the NNPC from incurring an additional debt burden to the tune of $3 billion to creditors.

Noting that he had to opt for the cashless policy of the swap of crude oil for refined petroleum products in the interest of the country, he explained that the swap deal was strictly based on value for value of the quantum of crude oil swapped, adding the trading partners involved in the deal had obligations to pay their taxes in line with Article 15 of the contract term.

He, however, acknowledged that the oil swap deal was “inherently” unprofitable considering the fact that NNPC incurred heavy demurrage and oil spillage due to infrastructural deficiencies as well as acts of vandalism on oil pipeline perpetrated by disgruntled persons in the country.

Oniwon insisted that he was not obliged to rely on an approval of the Federal Executive Council (FEC) since the 150,000 crude oil swapped fell within the 445,000 crude oil already procured by the NNPC from the government, and had been duly exchanged for an equivalent value of refined petroleum products into the country.

Acknowledging that he had an approval limit of $10 million, he said up to the time he left office, there was no known breach in the oil swap deal, just as he listed the availability of refined petroleum products in the nooks and crannies of the country as evidence of adherence to the crude oil swap deal when he was at the helm of the NNPC.

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Oniwon’s successor, Mr. Andrew Yakubu disclosed that he had to constitute a committee made up of stakeholders on how to reposition the oil industry shortly after he assumed office in 2012.

He said: “Sometime in 2013, my attention was drawn to the fact that the contract needed to be renewed. Based on concern raised, I set up a committee comprising various stakeholders. They had terms of references which include the issue at stake. The document never came back to me until I was disengaged in August 2014.”

He expressed support for a defined tenure for the NNPC group managing Director, saying: “If others who keep the nation’s monies have protected tenure, why not NNPC that produces the money for the country? Certainly not two years, one month as in my own case.

Marine &Petroleum Nigeria