Nigeria loses N222 billion in one year in shady crude oil swap deals — NEITI

Oil ship used to illustrate the story. [Photo credit: Livemint]

Nigeria lost over $723 million (about N221.5 billion, at N306.3 to $1) through the Offshore Processing Arrangement, OPA adopted by the Federal Government in 2015 to supply refined petroleum products in the country, the latest Nigeria Extractive Industries Transparency Initiative, NEITI 2015 Oil & Gas Industry Audit Report, has revealed.

The controversial arrangement was introduced by the Nigerian National Petroleum Corporation under the supervision of the then Minister of Petroleum Resources, Diezani Alison-Madueke, and was quite popular during the Goodluck Jonathan administration.

It was an arrangement that involved the allocation of Nigeria’s crude oil to select indigenous and foreign oil traders under agreed swap contract terms, in exchange for refined products for local consumption.

Considered an alternative arrangement for the country’s four dysfunctional refineries in Port Harcourt, Warri and Kaduna, the OPA was criticised by Nigerians as a channel for corruption and waste of the country’s crude oil resources.

Apart from the difficulty in getting commensurate value of petroleum products for the volume of crude oil allocated for refining, the arrangement was identified as one of the ways corrupt government officials funneled the country’s crude oil abroad for their selfish benefits.

The Buhari administration in November 2015 jettisoned the OPA for being “uneconomical and wasteful.”

In its place, the government opted for the Direct Sale-Direct Purchase, DSDP arrangement “to enthrone transparency and eliminate the activities of middlemen in the crude oil exchange for product matrix.”

Under the DSDP option, the NNPC directly sold crude oil and directly purchased refined petroleum products from international refineries.

The latest NEITI audit report published on Friday in Abuja revealed that under OPA, the value of refined petroleum products the country received was lower by $723 million than the value of the crude oil allocated to various oil trading firms for refining abroad.

The report noted that the huge loss was sustained even after allowances had been made for costs of crude and transportation as well as margins to the traders.

In addition, the report, which also covered other aspects of operations of the country’s oil and gas industry, said there was an outstanding liability of about $498 million from under-delivery of imported products by companies contracted under the OPA.

Other losses recorded during the period, the report noted, totaled about $90 million lost through a practice where the NNPC opted to use a revised/lower pricing option at the point of payment, instead of the higher price at the point of purchase.

The Executive Secretary of NEITI, Waziri Adio, disclosed at the presentation of the report in Abuja on Friday that NNPC had stopped the practice of double valuation with the coming of the present administration.

“NEITI recommends close monitoring of the Direct Sale Direct Purchase, DSDP arrangement that replaced the OPA, to ensure the country is not being shortchanged,” Mr. Adio said.

“NEITI It also calls for government to recovered the $498million OPA liabilities from the affected companies,” he added.

Other major highlights of the report include a recommendation for the Federal Government to ask the NNPC to render full account of over $16.8 billion (about N5.15 trillion, at N306.3 to $1) paid to it as NLNG’s dividends for the period 2000 to 2015.

The report said in 2015 alone, the NLNG Limited paid about $1.07 billion to NNPC, consisting about $1.04 billion as dividends; $3.1 million as interests, and $29.1 million as loan repayment.

The payments, the report explained, were for the loan granted to NLNG and the dividend for the 49 per cent stake the NNPC holds under the company’s equity on behalf of the Federal Government.

Details of the dividend payments showed that $211.34 million was paid in 2000; $322.08 million for 2001; $2266 million for 2002; $436.3 million for 2003; $280.1 million for 2004; $207.3 million for 2005; $333 million for 2006, and $842.3 million for 2007.

Similarly, about $2.6billion was paid in 2008; $879.9 million in 2009; $1.43 billion in 2010; $2.54 billion in 2011; $2.8 billion in 2012; $1.29 billion in 2013; $1.42 billion in 2014 and $1.08 billion in 2015.

Total NLNG Dividend, Interest and Loan Repayment.xlsx

YEARAmount in $
2000211,341,000
2001322,077,000
2002226,562,000
2003436,272,000
2004280,095,000
2005207,282,000
2006332,980,000
2007842,957,000
20082,613,170,000
2009879,839,000
20101,427,512,000
20112,537,503,000
20122,795,531,000
20131,289,592,000
20141,420,000,000
20151,076,012,000
Total16,898,725,000

The NNPC Spokesperson, Ndu Ughamadu, told PREMIUM TIMES it was too early to comment on details of a report he or his management had yet to read.

“The report has just come out. I will need some time to read it. I cannot comment on a report i have not read,” Mr. Ughamadu said.


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  • Hinds Peter

    How could the white man at one time advocate that there should be only standing jobs.And at another time collect millions of dollars to build desks for school children.The white man would be well advised to do as the proverb says”let sleeping dogs lie”.Peter Carlos Hinds.King of the Zulu.Barbados.

  • Hinds Peter

    I have often criticized the white man.But the white mans solutions often include a lowering in the standard of living.And an undermining of black interests.It is false to believe that because a white man has come from developed Europe or come from developed America.That he would like development for his black comrades.Quite the opposite.Whites would like black people to be backwards in need and to be dependent.Then.Many whites would be happy.Peter Carlos Hinds.King of the Zulu.Barbados.

    • Okokondem

      I am not sure I follow your thinking and analysis, but I sure hope you’re not blaming the white man for Nigeria’s failure to build and operate a refineries. That simply would be passing the buck as they say. Do you know for a country that has foreign expatriates involved in oil exploration regularly flying in and out of the country, cannot operate a national airline? Just think about it before you start blaming the white man for all of black man’s failures.

  • Solomon Brown

    I am confident the monetary cost of this lopsided deal will be enough to get the refineries running again, but our selfish leaders will pursue agenda’s that bring untold suffering to the people who put them in office.

    We have managed to elect men who’d go against the principle of self preservation just to make a quick buck.

    We are at a crossroads and ten more years of directionless sailing will get us no where, until we roll up our sleeves, set aside the ethnic politics and usher in a new era of nation building.

    • Okokondem

      Amen!

    • Steve

      The cost of a brand new refinery is about $3bn.

      • BugsyMcgraw

        How did u arrive at this Sir. Considering refineries vary in capacity which is a factor in determining cost of setup.

        Please shard knowledge/info.

    • emmanuel

      Really?
      …and you wish they would ‘set aside ethnic politics’? Is that possible?
      The parasitic countries in Nigeria will always run away from the truth and keep repeating it to whoever cares that we are better together in a one Nigeria. A one Nigeria where suicide bombers and Fulani herdsmen are NEVER identified by name, address, state of origin…and no relatives of theirs are ever known or mentioned publicly. That is the kind of one Nigeria we call a country and no state Governor, Minister, Senator or some other politician is able to stand up and demand explanation. It is visible to the blind and audible to the deaf that something is terribly wrong with Nigeria and Nigerians know it.

      However, the parasites are afraid of break up and how they would survive without the resources they have come to be accustomed to stealing. So my Dear, what you call ETHNICITIES are actually the different COUNTRIES that make up disunited Nigeria. And until we have the courage to dismember in peace or pieces there shall be no growth and no development…and characters like Buhari, Atiku, Obasanjo who would be useless in any European, American or Asian country will continue to be president.

  • share Idea

    We are in 2017 and this government want us to dwell on past administration without making any effort in carrying the citizens along in their operations.

    It took the current fuel scarcity for this government to be demystified with their claim od not paying any subsidy