Nigeria Extractive Industry Transparency Initiatives, NEITI, said Nigeria lost over $I billion in the oil swap agreement contract of the Nigerian National Petroleum Corporation, NNPC, from 2011 to 2012.
NEITI stated this at the public hearing organised by the House of Representatives ad-hoc committee to forensically investigate officials of NNPC and its subsidiaries, including the Nigeria Customs Service, NCS. NEITI, in its report noted that the objective of the swaps arrangement might have been compromised and abused. It stated that in 2012, the cost of the crude oil that was swapped was $6.4bn, while the value of refined products returned to the country in exchange for the swapped crude was $6.3 billion. This singular transaction recorded a loss of $100 million.
Further, it was stated that as the refineries continued to underperform, NNPC became unable to purchase imported fuel for cash as it had accumulated over $3 billion in debt to traders who supplied it with PMS and DPK. And to keep sufficient amounts of products flowing into the country, NNPC relied on crude oilfor- product swap arrangements.
NEITI said the transactions were not an efficient use of Nigeria’s oil, saying when compared to the total costs of these arrangements such as crude, processing fees, freight, demurrage, inspection and insurance with reported prices for PMS, DPK and AGO, large losses result.
It regretted that the swap arrangement as presently carried out records huge revenue loss to the nation that could have been channelled towards infrastructure development.
NEITI recommended that the crude NNPC allocates to the refineries should be limited to their actual refining capacity, while the Federal Government, through an appropriate agency should develop an agenda for the privatisation of the refineries.
Also, it said NNPC should discontinue the OPA and product exchange deals and concentrate on direct refined product importation as a short measure and do away with unaccountable and discretionary retention of funds. Chairman of the committee, Zakari Mohammed, said the public hearing was not to witch-hunt anybody, but to ensure that Nigeria was not shortchanged, locally or internationally.
The Speaker, Yakubu Dogara, while declaring the investigative hearing open expressed the need to revitalise the oil sector.
He said: “There is a cleavage between the public investments that has been made in the oil sector between 2010 to date. “The essence of this investigation is to expose abuses and losses to the Nigerian nation, with a view to revitalise the sector to make it more efficient and transparency driven.”
National Mirror
