How Nigeria loses billions in oil revenue to “briefcase traders” — Ribadu panel

Minister Of Petroleum Resources, Deziani Alison-Madueke
Minister Of Petroleum Resources, Deziani Alison-Madueke

Many of the companies that lift Nigeria’s crude are not properly registered or qualified.

Nov 11 (PREMIUM TIMES) — Nigeria is losing billions of dollars every year through the use of “briefcase traders” in exporting crude oil and importation of refined petroleum products, the report by the Nuhu Ribadu-led Petroleum Revenue Special Task Force, PRST, has revealed.

Contrary to the global trend for national oil companies to develop and own their independent crude oil marketing and trading subsidiaries, Nigeria is the only major crude oil producer in the world still relying on private commodities traders for all its oil and gas exports.

Though the Nigerian National Petroleum Corporation, NNPC, established at least five subsidiaries, including Hyson (Nigeria) Limited, Calson Bermuda Limited, Duke Oil, Napoil Trading and Nigermed Petroleum Trading, as international trading companies  to engage in direct oil trading activities, none is currently functional.

Most of the companies, the report said, are being used as financial and operational black boxes to carry out questionable deals.

Rather than these subsidiaries, the report said, between 2002 and 2011, almost 400 of the private commodities trading firms used by the Crude Oil Marketing Department, COMD, of the NNPC to export crude oil and import refined petroleum products did not have formal contracts.

The list of customers that have been contracted to lift Nigeria’s oil over the 10 years include Addax, Arcadia, Calson, Duke Oil, Glencore, Indian Oil Company, Ivory Coast, Napoil, Petrodel, Sao Tome, Senegal, SINOPEC, Trafigura and Vitol.

Other traders considered lacking the expertise in the crude oil trading business that have lifted the country’s crude oil once during the period include Tema Oil Refining, Petrobras, Itochu, Crossoil, Energem Petroleum Corporation, Ovlas Trading, AMG Petro Energy, Safiya Global Investments Limited, INC Natural Resources, Tristar, Emo Oil, Republic of Liberia, J&S Petroleum, OFSI Limited, and Petroleum Corp of Jamaica.

The list also includes Ommart Limited, Dainom Nigeria Limited, AMG Petro Energy, Tacorr, Roger Princeton, Rheinoel Limited, Sterling Oil Resources, Makwande, Alpha Petro Worldwide, Abacus, Ommart, Ovlas, Sunoil Refinery, Ghana National Petroleum Corporation, Mercuria, SPOG Petrochemicals, Sinclair Commercial, Sullom Voe, Liberia, Petroleum, Tocomo Oil, Centro Energy, Republic of Benin, Emo Oil, Arcadia, Overt Energy, Rheinoel Limited, and Sarb Energy.

According to the Ribadu panel report, this arrangement, fraught with bureaucratic bottlenecks and potential for discretion, waste and erosion of value, has resulted in huge losses in revenue to the government.

“Nigeria is the world’s only major oil producer that sells 100 per cent of its crude oil production capacity to private commodities traders, rather than directly to refineries,” the report noted.

With an average of 25 consignments of crude oil lifted from Nigeria every month, the report said the country loses between $100 thousand and $400 thousand per standard cargo of about 950 thousand barrels capacity in revenue margins paid by NNPC to briefcase traders.

With NNPC, through its crude marketing department, exporting the government’s share of the country’s 1.3 million barrels daily average crude oil production, the loss translates to several billions of dollars every month.

A loss of an average of between $0.20 and $0.40 is often incurred per barrel where the middleman transfers its export cargo to a real trader, a transaction the report said adds no value to the country’s petroleum sector or economy.

The report also noted that the use of private traders is susceptible to manipulation of official selling prices, OSPs, as traders are allowed to retroactively choose the most lucrative pricing option for individual cargoes, while others are given subsidized prices below the prevailing market levels.

Similarly, the report also identified government-to-government sales as another area where the country always records huge losses, with the government often granting other countries, mostly the country’s Sub-Saharan African neighbours, allocations at concessionary rates.

To curb the losses, the panel recommended that all crude oil lifting contracts are regularized to comply with due process, by ensuring that only traders with valid and formal contracts are granted lifting permits through an open competitive selection process.

Where the country’s five trading companies cannot be utilized, the panel recommended  that only traders with renowned expertise and technical know-how must be granted permits to lift the country’s crude, adding that where there are breaches to the policy, the approving authority should be held accountable.

The report of the committee, submitted to President Goodluck Jonathan, was disputed by two of its members who had accepted other oil related appointments during the work of the committee.

  • orbuka

    The question is was it Jonathan who registered the oil firms lifting oil in Nigeria? Most of them have been doing business since 2002. When Ribadu was the head of EFCC, a petition was penned to him on the oil firms invading the payment of tax-what happened to the report-instead attempt were made to have the men who wrote the said petition assassinated-that is ribadu for u

    • NAGODI

      WE ARE SO DUMB THAT WE THOUGHT SINCE GEJ WAS PRESIDENT SINCE 2009 HE WOULD HAVE DONE SOMETHING ABOUT THOSE FIRMS BY NOW. YET THEY ARE STILL IN BUSINESS WHICH MEANS GEJ APPROVE OF THEIR METHODS.

      RIBADO CAN INVESTIGATE AND PROSECUTE BUT CANNOT PASS JUDGEMENT ON OFFENDERS AND NIGERIAN JUDICIARY BEING WHAT IT IS THOSE OFFENDERS CAN BUY ANY JUDGE.

      YOU SEE ORBUKA, FROM IBB TO ABACHA, OBJ AND GEJ, THERE IS NO SUBSTITUTE TO AN HONEST AND UPRIGHT LEADER. NIGERIANS HAVE LEARN THIS LESSON THE HARD WAY.

      • AFAM

        POINT OF CORRECTION,THE REPORT COVERED OIL DEAL FOR OVER TEN YEARS WHICH RIBADU AS EFCC BOSS SERVED THE LARGE SHUNK OF IT,GEJ SAW ALL THESE RUBBISH BEFORE ELECTION BUT WANTS TO UPROOT THE CANCER BY REMOVING THE FUEL SUBSIDY WHICH GAVE WAY TO NUMEROUS REVELATIONS BUT WHAT DID GEJ GOT ? NAME CALLING AND BLACKMAILS…GEJ CAN ONLY ARREST AND CHARGE THOSE THIEVES TO COURT BUT HE HAS NO POWER TO CONVICT THEM,OUR JUDICIARY SHOULD WAKE UP AND KNOW THEIR DUTIES..

    • Eziokwu bu Ndu

      That is for those who do not know Ribadu. He can be more foolish than an ostrich! The special taskforce assignment looks more like a trap set for a man who is so intoxicated by power. It was meant to rubbish him. Wiser associates warned him not to accept the role. He rather thought it was an opportunity to enhance his political chances and get at his perceived enemies. He has shot himself on the foot; he will bleed to …

  • akpos1

    Is it Nigeria loses billions in oil revenue… OR the South South & South East Republic loses billions to continent Nigeria briefcase traders! Verily verily I say unto you, Nigeria is not a country but a disjointed continent. Break up NOW!

    Long live the peoples republic of the SS & SE

    • Eziokwu bu Ndu

      Easy, east, Akpos. The signs are clear. Break up is imminent!

  • akpos1

    1914 was a disaster. The stupidity and greed of the British

    Hear ACF…“Nigerian democracy is not matured enough for state police which is subject to abuse by state governments against national unity. What is more, the states are not
    financially viable enough to manage state police..”

    This underscores the latent fear within the Northern and cowardly Western countries of continent Nigeria…Fear that state police may metamorphose into state army and be a potent route to secession. Unfortunately or fortunately, depending on the side you are, this secession is inevitable…

    1914 is an aberration. There is no one continent with such gaping diversity and divergence of its peoples as u find in continent Nigeria. There is no basis for coexistence except that the
    parasitic North & cowardly West of continent Nigeria wud want to continue to feed on the wealth of the SS & SE countries. This is totally unacceptable to the countries of the SS & SE.

    Long live the republic of the SS & SE

    • DAN-HAUSA

      1914 was a cancer that that has affected the whole body. The British meet the northerners with religion and education while the SS and SE were busy worshiping idols. All of a sudden amalgamation struck; with people that are heartless and of dubious character. This cancer (SS and SE) has to be removed for it to be alive.

    • Eziokwu bu Ndu

      Are we just knowing that 1914 was a hurricane? Too bad then. When a young, hot, Oxford University graduate of European and Modern History named Ojukwu saw it 45 years ago, what name did we call him? The trouble is yet to come and can only end as soon as we address the issue(s) for which Biafra went to war. Good morning Nigeria indeed! Or, is Nigeria still sleeping?

  • Mpitikwelu_na_Ugwu_Awusa

    If Jonathan didn’t set up this committee, Nigerians wont have known about this perfidy. KUDOS TO MR PRESIDENT! Now let’s go to work and end the charade that have been there for decades.

  • Eziokwu bu Ndu

    I dislike hypocrites and more, foolish ones. Ribadu is one of them. Did he not notice this rot when he was EFCC chairman? He only wants to indict the government of President Jonathan and prsent PDP in bad light. That could probably enhance the chances of ACN. He miscalculated.