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Presidency holds back oil lifting contract approvals

By The Rainbow
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Barely one month to the end of the year, the Federal  Government is yet to approve the winners of crude oil term contracts for the 2013/2014 period. Crude term contractors typically lift Nigeria's oil, look for buyers abroad, remit an agreed sum per barrel to government, and earn a margin for the effort.

The identities, selection process and terms of contract  of the consignees who have been lifting Nigerian crude since July this year, when the last contract regime expired, have not been disclosed by the relevant authorities.

It was expected that another set of contractors would have been engaged through a transparent tenders process by now, as has been the tradition, and in the interest of an unhindered flow of government business and revenue generation, but this has not happened.

Some operators are saying there is the possibility that the 2012/2013 contracts are being rolled over.

The shroud of secrecy about the present situation is inducing industry operators to speculate that government may have decided to allow some of those contractors who were appointed last year to roll over their contracts because it intends to collect political patronage from them, to finance the 2015 elections.

The Nigerian National Petroleum Corporation (NNPC) had put out advertisements in national and international newspapers inviting eligible companies to apply for the crude oil term contract 2013/2014.

According to industry sources, the invitation was advertised on the 20th of May 2013. Applications were submitted on or before the 18th of June 2013 before 4pm. There has been no public information of the number or identities of applicants that submitted their proposals.

Industry operators say the secrecy surrounding the process is puzzling.

Stakeholders and applicants are wondering when the list of successful applicants will be made public.

Applicants spoken to say they have not received acknowledgements of their applications, nor have they been informed about the process, its timing and status, despite the fact that the advertisement said the contracts would be effective from August 1,  2013 and would be for a 12-month period.

'If this schedule has changed, do we not have a right to be informed?' one industry operators asked.

'When is the oil sector going to really become transparent and accountable?  If we don't know who applied, how will we know if the winners of the contract really participated and if they did, were they fairly chosen?', he added.

'There are internationally acceptable ways for tenders to be conducted. While we all wait with bated breath for the almighty Petroleum Industry Bill that will make all wrongs right, we can start doing some things in an internationally acceptable manner', another operator said.

BusinessDay  investigation  revealed  that  in spite of the fact  that  the Nigerian National Petroleum Corporation (NNPC) had  concluded  the necessary paper  work on the contractors that tendered for the  jobs  and made its recommendations, the Presidency is yet approve the list sent to it by the NNPC.

Observers say what is happening further demonstrates the shortage of transparency in the way government sometimes does business.  'If not, it has no reason not to have approved the list',an industry operator said.

In the past, foreign traders such as Glencore, Trafigura, Vitol, Arcadia, Addax and Glencore dominated crude contracts.

But in a deliberate move to promote local content, more Nigerian companies have been added to the list. The Nigerian companies includes, Sahara Energy Ltd, Oando Plc, Aiteo, Ontario Petroleum and Taleveras.

Recently there was outrage in the National Assembly over the $6.8 billion (about N1.07 trillion) alleged fraud involving the Nigerian National Petroleum Corporation (NNPC) and two Swiss oil traders, an allegation the NNPC quickly dismissed  as tissues of lies.

The report titled: 'Swiss Traders Opaque Deals in Nigeria,' by a Swiss non-governmental advocacy organisation, the Berne Declaration,  outlined how the NNPC, in connivance with two Swiss oil trading companies - Vitol and Trafigura, allegedly drained Nigeria of over $6.8 billion in subsidy payments through shady deals involving lifting of crude oil at prices far below what obtained in the open market.

It said Vitol and Trafigura, two major oil traders in Switzerland, and seven Nigerian fuel importers created offshore subsidiaries referred to as 'letterbox companies' to defraud the country of over $6.8bn in subsidy payments between 2009 and 2011 - in addition to such activities as ship-to-ship transfer to create untraceable paperwork in payment of subsidy money to non-existing importers who partnered with politically exposed persons.

Source: Business Day