Oil swap probe: Reps uncover illegal companies used by NNPC

Oil swap probe: Reps uncover illegal companies used by NNPC

By Emman Ovuakporie & Johnbosco Agbakwuru 


 THE House of Representatives ad-hoc Committee on Crude Oil Swap Probe, yesterday, confirmed the receipt of illegal companies registered by the Nigerian National Petroleum Corporation, NNPC, but unknown to the Federal Ministry of Finance Incorporated, MOFI. The list was part of the documents obtained from the Office of the Accountant of the Federation for the ongoing investigative public hearing on the $24 billion crude oil swap deals, as revealed by Hamman Pategi (APC, Kwara) a member of the committee. 

One of the companies was Duke Oil, set up to trade crude oil on behalf of NNPC at the international market. Also, former Group Managing Director, GMD, of the NNPC, Joseph Dawha, told the panel headed by Zakari Mohammed  how he migrated the corporation from crude oil deals to Offshore Processing Agreements, OPA,  absolving  himself of blames over the flawed crude-oil-for products exchange (oil swap) arrangement. 

Dawha, who appeared before the committee, yesterday, said he met the arrangement on ground on assumption of duty in August 2014 but was not comfortable with it. According to the former GMD, NNPC entered into oil swap and OPA contracts with the trading companies in 2010 to terminate between 2013 and 2014. Dawha explained that the total volume of crude under these arrangements was 210,000 barrels per day, adding that though the contracts had expired, the NNPC had continued to operate the contracts. He said: “Thus, as at August 2014, when I assumed office, the contracts were still being run long after they had all expired. “Based on legal and compelling need to reconcile the contracts, to ensure actual delivery and receipt of the agreed volume of products against the crude lifted, it became imperative that the arrangement under which the parties had been operating for several months, prior to my assumption of office without formal contracts, be formalized to provide legal basis for the parties’ rights and obligations. 

Minister’s  approval “Subsequently, we requested approval from the then Minister of Petroleum Resources for renewal of the contracts. Upon receipt of the then minister’s approval granted on August 29, 2014, the contracts were formally extended to cover the periods from their respective dates of expiry until the end of December 2014. “If I had not got the ministerial approval, I may have been the GMD with the shortest tenure because there is no way I would have allowed it to continue.” He told  the Committee that oil swap was eventually dropped for OPA based on value, adding that the same trading firms involved in the oil swap arrangement were contracted to continue with the OPA. The committee, however, expressed concern over why Dawha, who was able to identify the flaws with the previous contracts, still engaged the same companies that breached the oil swap contracts for the OPA. Dawha said he decided to continue with the said companies because they were on the existing platform for supply, adding that the precarious situation of fuel supply at the time left NNPC with no time to engage new traders.