Former Nigeria Oil Minister approved $24bn crude swap without contract – Ex-NNPC Boss

February 17, 2016 | Government & Regulations, Management, Nigeria

Abuja, Nigeria | – A former Group Managing Director of the Nigerian National Petroleum Corporation, (NNPC)  Mr. Austin Oniwon, has claimed that immediate past Minister of Petroleum, Diezani Alison-Madueke approved $24bn crude swap without a contract.

NNPC Headquaters & Towers, Abuja

NNPC Headquaters & Towers, Abuja

He said there was no formal contract between the NNPC and the trading companies that lifted $24bn worth of crude oil from the country between 2011 and 2014 reports a local newspaper the Punch.

Mr. Oniwon made this revelation when he appeared before the Nigerian House of Representatives Ad Hoc Committee on Crude Oil Swap on Tuesday.

He said the extension was not a formal contract before he (Oniwon) left office in 2012.  “There was an approval for the extension by the minister; I believe the records are with the NNPC,” he added.

It could be recalled that the NNPC began taking 445,000 barrels of crude daily in 2010 for refining in a bid to meet the country’s local demand of petroleum products.

However, when the country’s refineries failed to run, the NNPC resorted to exchanging the crude (swap) for refined products through an arrangement with appointed crude trading firms.

The original (first) contract was signed between the NNPC and two crude traders, Duke Oil and Tranfigura in 2010 to last for one year. It expired officially in 2011.

However, Alison-Madueke reportedly granted an extension of the contract without the NNPC formally signing another contract on the new (second) deal.

One of the lawmakers, Mr. Michael Enyong, said, “These companies had lifted crude worth $24bn before the contract was signed in 2014 and backdated to look like it was signed in 2011 when the first one expired.”

Oniwon also argued that as GMD of the NNPC, he did not require a presidential and Federal Executive Council approval to enter into the swap arrangements.

He added that the swap crude was different from the Federation Crude, the latter being entirely the property of the government.

Besides, he stated that only 150,000 barrels out of the 445,000 were traded under the swap deals.

He added, “I am not a lawyer, but I didn’t need anybody’s approval to take crude to the refinery for refining if the refineries were running.

“This crude had been paid for by the NNPC. If I needed to take the crude for exchange, I am not going to write the Federal Government. It is NNPC’s decision on what to do to guarantee regular supply of products in the country.

“That was the whole essence of the swap arrangement; to ensure that we had adequate products, which we achieved successfully.”

“If there was supposed to be a higher approval, it was the minister who should seek the approval, not the NNPC,” Oniwon added.

When asked what was the spending or approval limit of the GMD, Oniwon replied, “It was put at $10million.”

However, the committee insisted that the NNPC under Oniwon and the former minister breached procurement procedures by engaging in a transaction worth well above N100m without FEC’s approval.

Oniwon’s successor, Mr. Andrew Yakubu, also appeared before the committee to say that he made efforts to review the swap arrangement with a view to correcting noticeable lapses, but that he was frustrated.

He added, “Among the issues we raised were the controversies generated by the swap arrangement, the need for contract valuation and how to improve on it to be more beneficial to our operations.

“I forwarded a report to the minister in April 2014 and the document never came to me until my removal (as GMD) was announced by 9pm on August 1, 2014.”