HOUSE: FG LOSES $1.87BN TO OIL PRICE MANIPULATION

The House of Represen-tatives Ad hoc Commit-tee probing the operations of the Nigeria National Petroleum Corporation (NNPC) and its subsidiaries yesterday alleged that Nigeria lost about $1.87billion between 2004 and 2007 due to manipulation of prices of crude oil exported by the country.

Similarly, crude oil sales worth N65 billion cannot be traced in the Federation Account and may have disappeared into some private pockets in the oil lifting cartel.

The revelations came at the resumed investigative public hearing on the activities of NNPC and its subsidiaries in the last 10 years.

The committee said it discovered that between 1999 and 2001, NNPC was taking crude oil meant to be refined in the country at $9.5 per barrel.

This was later increased to $18 per barrel in 2002, but by 2003, NNPC was found to have charged itself two different prices for the crude it allocated to itself.

Even more shocking is the revelation that some firms involved in crude oil lifting under a Joint Venture arrangement with NNPC had been in operation in Nigeria in the last 20 years without the necessary registration with the Corporate Affairs Commission (CAC) in contravention of the Companies and Allied Matters Act.

According to the committee, the companies have neither records of paying the mandatory company income tax nor have they complied with the requirement of investments in Nigeria, yet, they control about 40 per cent of the crude oil lifting trade in the country.

The ad hoc committee accused NNPC of aiding and abetting the cartel, which had been milking the country dry under the guise of lifting crude oil meant for the international market.

Chairman of the committee, Hon. Igo Aguma, said over the years, NNPC had been flouting its own guidelines in relation to the pre-qualification of companies that should participate in the lifting of crude oil, the quantum of crude each should lift and the duration of the contract term.

Aguma, who spoke at the resumed public hearing on the activities of operators in the crude lifting sub-sector, said there were also discrepancies between the value of crude oil allocated to NNPC and the monies the oil corporation remitted to the Federation Account.

He described the crude oil lifting scenario as a fraudulent system run more at the whims and caprices of those saddled with the responsibility of managing crude oil exports at NNPC than on the established guidelines set by the corporation.

He alleged that the commonwealth of the nation had been subjected to such a subjective and laissez-faire attitude given the loose nature of selecting those qualified to lift crude oil in Nigeria.

Aguma alleged that as at 2007, there were 47 firms on the official list of crude oil lifters whereas other records available to the committee showed that as many as 51 firms actually lifted crude oil from Nigeria.

Members of the ad hoc committee raised several questions on the differentials between the prices NNPC obtained crude oil from the Federal Government and the amount of money it brought back to the Federation Account.

For instance in 2004, the NNPC claimed to have paid N638 billion into the Federation Account in respect of what it called 'domestic crude' allocated to it.

But the committee said N289 billion was reflected in the audited account of the corporation, leaving out a shortfall of N349 billion.

Similarly in 2005, NNPC claimed to have paid N66.3 billion in respect of domestic crude allocated to it, but the panel's investigations showed that the money was never remitted to the Federation Account.

Based on these discrepancies, the ad hoc committee has summoned the Nigerian Extractive Industry Initiative (NEITI) as well as Deloitte and Akintola Williams, the firm that audited the accounts of NNPC and gave it a clean bill of health.

NNPC has also been asked to submit within seven days details of crude oil production in the country over the last 10 years.

The document, according to the lawmakers, should indicate what quantum of crude was produced by each of the oil multinationals and how much of this was exported from the shores of Nigeria.

The public hearing had in attendance the Group Managing Director of the NNPC, Dr. Mohammed Barkindo, and other top functionaries of the corporation.

Also present were three former Group Managing Directors namely Jackson Gaius-Obaseki, Funso Kupolokun and Mohammed Yar'Adua.

Meanwhile, crude oil prices soared above $71 per barrel in early trading yesterday, just as the Utunana oil pumping station belonging to United States oil major, Chevron, was gutted by fire.

But as usual, the fire incident has engendered claims and counter claims between the military Joint Task Force (JTF) and militants in the Niger Delta.

While the Movement for the Emancipation of the Niger Delta (MEND) claimed responsibility for the incident, JTF Spokesman, Colonel Rabe Abubakar, said the fire at the oil facility was accidental or electrical and not caused by criminal activity.

A Bloomberg report attributed yesterday's price rally to the expected fall in crude stocks and projections that the US dollar may extend its decline against world currencies.

Crude futures rose to as high as $71.56 in pre-market trading on the New York Mercantile Exchange after closing at $70.01 on Tuesday, the highest since early November.

The upward march of benchmark crude pulled related energy prices higher as well.

In other Nymex trading, gasoline and heating oil for July delivery both rose by more than 2 cents to $1.99 a gallon and $1.83 a gallon.

Natural gas for July delivery was up by more than 10 cents, at $3.83 per 1,000 cubic feet. In London, Brent prices rose in tandem with benchmark crude, gaining $1.19 to $70.81 a barrel on the ICE Futures exchange.

Oil dropped to $32.40 late last year, its lowest since early 2004 after hitting an all time highs of $147.37 a barrel in July.

The development had prompted the Organisation of Petroleum Exporting Countries (OPEC), producer of a third of world's oil, to cut 4.2 million bpd or around five per cent of global supply.

Chevron's General Manager in charge of Policy, Government and Public Affairs, Mr. Femi Odumabo, confirmed the Utonana fire incident, saying relevant stakeholders had been informed and that the situation was being assessed.

He said: 'Chevron Nigeria Limited (CNL), operator of the Nigerian National Petroleum Corporation (NNPC)/CNL Joint Venture, confirms that there was a fire at the Utonana production facility in Delta State on Tuesday, June 09, 2009.

'Our workforce is safe, relevant stakeholders have been informed and we are continuing to assess the situation and work to restore the integrity of the facility which had been shut down before the incident.'

However, with the Chevron fire incident, MEND claimed it was kick-starting its operation 'Hurricane Piper Alpha' against the oil industry in the country.

Spokesman of the organisation, Gbomo Jomo, in an online message from their official e-mail address, said they set the facility ablaze and would proceed in the same manner to attack other facilities until the export capacity of Nigeria comes to zero.

The group further alleged that it was on a revenge mission because of the bombing of Ijaw communities by the JTF which had denied by the force several times.

Gbomo Jomo said: 'As forewarned, a major 'Cordon and Search' operation by the Movement for the Emancipation of the Niger Delta (MEND) commenced today, Tuesday, June 9, 2009 at about 2200 hrs with devastating effects on the heavily fortified Chevron Otunana flow station in Delta State which is currently engulfed in fire after being overwhelmed by our fighters.

'Code named 'Hurricane Piper Alpha', the objective is to smoke out war criminals of the Northern Nigerian armed forces that have taken refuge in oil installations and give them instant jungle justice.

Responding to the claim that it was a minor fire incident, MEND said: 'We found it amusing to read the feeble and unconvincing statement by the military JTF spokesman, Col. Rabe Abubakar, over the Tuesday attack on the Otunana flow station.

'His explanation about an accident in an unused flow station is understandably to cover their shame and shock that in spite of all that show of force, the security in place can be easily breached'.

In what appeared a retaliation of the declaration of Government Ekpumopolo alias Tompolo wanted for crimes, MEND said it was also declaring the head of the JTF, Major General Sarkin Yaki-Bello, wanted.

But Abubakar, who insisted that the fire was 'caused by a system failure, either chemical or electrical,' added that no oil production was affected as the facility had been shut down for the past six months.

He said there was no way the militants could have attacked the facility without confronting the troops stationed there, saying MEND was merely seeking 'cheap popularity' by waging a 'media war'.

'There was a fire outbreak at Chevron Flow Station at Utonana (Otumara) in Warri South West Local Government Area of Delta State, at about 9p.m. yesterday (Tuesday)', the JTF spokesman said in a statement in Warri yesterday, adding, 'the fire resulted from a system failure from one of the platforms, which was out of bounds to all COSF.'

'Therefore, this claim and all other claims by any militant group should be disregarded in their entirety. We want to assure the general public and oil companies operating in this region that the JTF is equal to the task of protecting them, no matter where the distractions and intimidations are coming from.'

The recent attacks followed last month's launch of the military's biggest offensive in years against Niger Delta gunmen.

Security forces have bombarded militant camps from the air and sea in search of the armed militants believed to have fled into surrounding communities.