These are indeed busy times at the Nigerian National Petroleum Corporation (NNPC). Shortly after it effected a massive reshuffle, sack and retirement of top management personnel at its various strategic business divisions and subsidiary companies that pruned the top level personnel from 122 to 88, the corporation is also taking steps to plug loopholes leading to loss of revenue for the nation.
EnergyNewsTM learnt that following the marching order given by President Muhammadu Buhari to clean up the NNPC and plug the leakages in the state-run oil firm, Dr. Emmanuel Ibe Kachikwu, Group Managing Director, NNPC, is set to invite oil traders who were awarded crude oil swaps and offshore processing contracts by the NNPC during the immediate past administration of President Goodluck Jonathan.
The goal of the meeting is to reopen the reconciliation process for the oil swaps and offshore processing agreements (OPAs) to determine if the oil traders met the terms of the contracts in terms of delivery of fuel product cargoes to NNPC’s subsidiary, the Pipelines and Products Marketing Company (PPMC).
The Department of State Services (DSS) had earlier opened a probe into the crude oil swaps and OPAs entered into by NNPC and oil traders.
But the traders claimed that the probe was a witch-hunt triggered by one of their competitors in the industry and argued that swaps and OPAs were covered by irrevocable standing letters of credit to the value of the crude of lifted or petroleum products scheduled for delivery to PPMC.
The traders also explained that a quarterly reconciliation process is carried out by the NNPC to ascertain under or over-deliveries of product cargoes, following which refunds are made to the corporation and vice versa.
However, it was alleged that some of the traders lifted crude oil and sold it, but under-delivered product cargoes to NNPC, thus costing the country several billions of dollars.
But an official of the NNPC who pleaded anonymity said, “The goal is to make them pay up once it is ascertained that they under-delivered product cargoes and not to send them to jail. Kachikwu is even willing to accept a payment plan that would ensure that their companies do not go under because they are going concerns and he recognises that they are employers of labour. So all he wants is for them to refund what they owe NNPC (or PPMC).”
Kachikwu, he explained, would also be investigating what became of the funds meant to have been paid to or swapped on behalf of PPMC on retained petroleum products such as low pour fuel oil (LPFO), naphtha, bitumen and other heavy fuels that the oil traders were not required to deliver.
The source further explained that, “PPMC usually orders for just petrol and kerosene under the oil swaps and offshore processing contracts, as there is high domestic demand for these two products, while diesel which is completely deregulated is imported independently by oil marketers. However in the refining process, other distillates are produced which may not be required by PPMC. These distillates comprise the heavy liquids, also known as retained products, which are either supposed to be sold and the proceeds from the sale returned to PPMC or swapped for more petrol and kerosene, failing which oil traders will remain indebted to the corporation.”
Of Nigeria’s total oil output, NNPC is allocated 445,000 barrels per day (bpd), being the nameplate capacity of its four refineries.
The rule of thumb is that NNPC is required to pay for the 445,000bpd at the going price of crude oil in the international market and remit the proceeds to Federation Account, but often failed to remit the funds to the treasury.
Also, owing to Nigeria’s low refining output, NNPC has operated the crude swaps and offshore processing contracts for decades.
Under the swaps, NNPC used to allocate about 50 per cent of its 445,000bpd to oil traders who in turn sold the crude oil and were expected to import petroleum products or enter into contracts with offshore refineries that produce the products for delivery to Nigeria.
By 2014, however, NNPC was allocating its entire 445,000bpd to traders who were alleged to have sold the crude oil but under-delivered product cargoes, thus increasing Nigeria’s losses.
The probe into what the country is losing due to product swap arrangement is coming on the heels of the recent massive shake up at the NNPC. The development, which was contained in a statement from Ohi Alegbe, the corporation’s group general manager, public affairs, showed that key among those that were relieved of their jobs were Haruna Momoh, who superintended over the Pipeline and Products Marketing Company (PPMC), a subsidiary of the NNPC, as well as the Tony Muoneke who was appointed managing director of the Nigerian Petroleum Development Company (NPDC) not long ago.
Also, the corporation formally disclosed the appointment of four new group executive directors (GEDs) who will manage affairs at the four new directorates that it said have been approved by President Muhammadu Buhari.
According to the statement, Ibe Kachikwu, group managing director (GMD) of NNPC, disclosed that the new appointments are in line with the federal government’s aspiration to transform the corporation into a lean, efficient, business-focused, transparent and accountable national oil company.
Kachikwu said that the move was also in keeping with international best practices.
As approved by Buhari, the statement confirmed earlier reports that Maikanti Baru will oversee the corporation’s exploration and production division; Isiaka Abdulrazaq will take charge as the GED for finance and services; Dennis Nnamdi Ajulu as the GED for refining and technology while Babatunde Victor Adeniran will head the commercial and investment division.
It noted that Chidi Momah was appointed as the new company secretary and legal adviser for the corporation.
Other appointment include Esther Nnamdi Ogbue as the managing director (MD) of PPMC, Chinedu Ezeribe as MD, Warri Refining and Petrochemicals Company (WRPC); Babatunde Bakare as MD of the Nigerian Gas Company (NGC).

Oluchi Ugboaja
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