The Nigerian National Petroleum Corporation, NNPC, on Thursday formally opened tenders from prospective bidders for its direct sale of crude oil/direct purchase of petroleum products contracts.
The Group Managing Director of the NNPC, Maikanti Baru, who performed the official opening of the bids, said a total of 128 bids were harvested from prospective bidders to jostle for contract involving about 800,000 barrels of crude oil per annum.
Mr. Baru, who described the arrangement as a major component of the NNPC’s petroleum products supply portfolio, said since its inception, it had helped stabilize petroleum products supply to consumers.
He said the bid process was structured to avoid the pitfalls of the past where inexperienced contractors were awarded contracts they were unable to deliver on scheduled terms.
“Some of the experiences the NNPC wants to avoid have to do with scheduling of contracts,” Mr. Baru said. “When products are to be delivered, companies are expected to meet the scheduled lay can date.
“We want to make sure whoever emerges from the process would be able to meet the schedule set by the corporation, to avoid some dislocations in the fuel distribution system.”
Group General Manager, Crude Oil Marketing Department, Melee Kyari, said the stipulated guidelines published in the NNPC website for prospective bidders were in line with the NNPC’s policy, Public Procurement Act and the Nigerian Content law.
Apart from physical presence, in terms of fuel storage depots and retail outlets across the country as well as involvement in crude oil exploration and production, Mr. Kyari said the consortia or single firms that would emerge at the end of the selection process must domesticate their operations.
Besides, he said the selected companies must be technically competent, have established operational processes, access to finance and the crude oil market as well as capacity for logistics required to support its operations in compliance with the Nigerian content law 2010.
“The bidders must have a minimum turnover of $500 million (or the Naira equivalent) and net worth of $250 million (or the Naira equivalent) for the financial year ending of 2015,” the guidelines for prospective bidders stated.
After the selection of the compliant bids, Mr. Kyari said a team of evaluators would review the technical bids and the selected tenders would be issued commercial terms sheets prior to negotiations prior to the final closure of the deal.
“NNPC will not leave any room for corruption in the bid. Transparency and accountability will be the watchwords to improve reliability of supply to the country. Direct sale crude oil/direct purchase of petroleum products is a way of selling the country’s crude oil in exchange for products equivalent to higher value.
“This is a way of ensuring security of supply in the country as a backup to the existing local supply by NNPC and other third party organisations. Availability of petroleum products is not just key to national security, but to the entire economic wellbeing of the country,” Mr. Kyari said.
“The NNPC is committed to select partner companies with track record of high performance in exchange of crude oil for petroleum products in the procurement of products and supply to partners,” he added.
He used the occasion to warn fraudsters issuing fake crude oil and gas contracts in the country to desist from their illegal activities.
“For the avoidance of doubt NNPC does not allocate off-spec crude oil nor have joint crude oil and gas allocation with any company. NNPC does not participate in spot allocations and does not have any cargo arrangement with anybody. NNPC does not have any agent anywhere in the world involved in crude oil transactions outside the NNPC headquarters, except its affiliate company, Duke Oil, based in London,” he said.