Another chapter was yesterday opened in the probe of the multi-billion dollar crude swap that cost Nigeria so much cash and delivered little fuel — in some cases.
The probe of the Nigeria National Petroleum Corporation (NNPC) contracts has extended to the managing directors of the four troubled refineries.
They are being quizzed in Abuja by security agents, who are eager to get an insight into the allocation of crude to the refineries and how crude was swapped, it was learnt last night.
Those being questioned to ascertain how they have been managing the crude allocated to the refineries and what they processed are: Warri Refinery Managing Director Paul Obelley, Port Harcourt Refinery Managing Director Fred Enjugu and Kaduna Refinery chief Saidu Mohammed. They could not be reached for comments last night.
The investigation, which began last month, was sparked by the need to arrest the huge cash lost through opaque contracts in which crude oil worth billions of dollars is given to traders in exchange for refined imports, mainly gasoline.
The Economic and Financial Crimes Commission (EFCC) and the Directorate of Security Services (DSS) launched the investigation last month.
A security source said the DSS wanted to find out how the value of the crude and products was computed.
“It appears that the value of the crude was more than the value of the refined imported,” a security source said.
The contracts, known as offshore processing agreements (OPAs) are between Pipelines and Product Marketing Co (PPMC), a subsidiary of NNPC and companies.
The NNPC last week admitted that some of its officials were invited by security agencies “to shed light” on the contracts.
The Nigerian Extractive Industries Transparency Initiative has said there was a revenue loss of at least $600 million due to a discrepancy between the value of the crude and the products delivered. The figure was taken from its 2009-2011 and 2012 audits of the oil and gas industry. The latest was released this year.
Some contract-holders have said that the discrepancies in value were reconciled.
Product exchange (swap) and offshore processing agreement (OPA) are transactions in which the NNPC supplies the other party with crude oil in return for refined products for sale locally on a value-for-value basis.
Under the Offshore Processing Agreements (OPA), the NNPC provides crude oil to another party who would refine the crude oil on behalf of the NNPC and return the refined products to the Corporation based on the yield slate of the refinery. The NNPC provides the crude oil and pays the refining and other incidental costs.
But an NNPC source said last night that managing directors of the refineries were not involved in the SWAP and OPA arrangements.
According to him, it is completely between the oil traders and the government. He added that the swap and OPA oil deals were created as a result of the poor state of the refineries, adding that the refineries are now begging for supply of crude to enable them produce.
He also explained that because the refineries are down and the rule is that the NNPC must remit the dollar value of the 445,000 barrels per day supply into the Federation Account, the corporation sells the crude at international market price and remits into the Federation Account.
“The Swap and OPA arrangements were considered economically wise and beneficial to the government in terms of value addition, that is why it was introduced,: the source added, pleading not to be named because he is not allowed to speak.
The fear of a massive purge after a probe of the activities of the NNPC has gripped top officials of the oil giant.
The Deputy Group Managing Director/Group Executive Director (Finance and Accounts), Bernard Otti has been away abroad since the inauguration of the new government. Sources and he is abroad for medical reasons.
Company Secretary/Legal Adviser Ikechukwu Oguine resigned and paid three months salary to the corporation in lieu of notice.
The four refineries will resume production next month, according to NNPC spokesman Ohi Alegbe.
The commencement of production by the refineries raises hope of an end to perennial petrol shortages that have plagued the country, which though is Africa’s largest crude producer, has been battling with a crippling fuel scarcity.
“The refineries at Warri, Port Harcourt and Kaduna will resume next month after a successful turn-around-maintenance (overhaul) of their facilities,” Alegbe told French News Agency, (AFP).
“The turn-around-maintenance has been on for some time. We did not just want to make any noise about it. The refineries will start production as soon as they have delivery of crude oil for refining,” he said.
Alegbe added that the resumption of refinery activity “will significantly improve the supply of petroleum products in the country.”
The NNPC has four refineries — two in Port Harcourt, the Rivers State capital, one in Kaduna and another in Warri, with a combined installed capacity of 445,000 barrels per day.
A network of pipelines and depots located throughout the country links these refineries.
Nigeria produces two million barrels of crude oil a day, but has to export it due to a lack of working refineries. It then imports fuel back into the country at international market prices – a situation blamed on corruption and mismanagement.
To cushion the blow on the general population, the government sells fuel on the streets at subsidised prices, and makes up for the higher amounts spent by importers by reimbursing them the difference — a system seen as rife with false claims and overpayments.
Last month, the fuel shortage almost grounded Nigeria to a halt, as fuel importers and marketers shut their depots to protest some $1 billion (900 million euros) in unpaid reimbursements.
Black market and legitimate petrol vendors did a brisk trade, selling at around N300 ($1.5; 1.3 euros) a litre — well above the officially-set price of N87.
In January 2012, the government tried to end the subsidies, causing petrol prices to more than double. It was ultimately forced to reinstate the payments after tens of thousands of people took to the streets in violent protests that left more than a dozen dead.
The post DSS grills refineries MDs in multi-billion dollar oil deals appeared first on The Nation.
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