How alleged corruption in NNPC is fueling petrol scarcity

The current fuel scarcity across Nigeria is due largely to the entrenched corruption at the Nigerian National Petroleum Corporation, reliable sources familiar with the operations of the state-owned oil company have told PREMIUM TIMES.
The NNPC had said the resurgent queues in filling stations were due to panic buying and claimed it had 1.4 billion litre petrol reserve.
But our sources have countered claims by the corporation, saying the current scarcity might last till year end because the depots were drying up fast.
They believe the NNPC remained riddled by corruption and inefficiency with some top officials acting from the same “compromised” script that characterised the Goodluck Jonathan administration.
“They (NNPC) haven’t changed,” one of our sources said. “It’s still the same old lies. They say they have 1.4 billion litres, Nigeria consumes N35 million litres a day. By my calculation that should last us for 40 days. So if somebody says he has 1.4 billion litres, how come there are queues.”
With the emergence of the long queues, filling station owners are selling the product above the official price of N87 per liter.
In Rivers State for instance, petrol is sold for as much as N250 per liter as is it is in many other parts of the country.
The NNPC had also blamed the vandalisation of pipelines and marketers for hoarding the product to create what it described as artificial scarcity.
Frustrated, by the growing queues at filling stations, last Tuesday, the Minister of State on Petroleum, who also doubles as the Group General Manager of the NNPC, Ibe Kachikwu, ordered the Department of Petroleum Resources to seal off stations caught hoarding fuel and distribute the fuel to Nigerians for free.
The threat seems to have done very little to shorten the queues at filling stations as they have stretched longer into nearby roads causing traffic gridlock in places like Lagos.
Our sources said Mr. Kachikwu was merely playing to the gallery by issuing threats. They said the recent scarcity is as a result of corruption and NNPC’s weak regulation.
They said the corporation’s hierarchy is back in bed with some of the companies discredited in the corruption-tainted Offshore Processing Arrangement.
“The problem is that it is the same old circle in NNPC. All those people that are importing doing swaps, they are back again. It is still the same old people,” one source said.
“The OPA and Swap they are doing under Jonathan; they have not really broken away from the practice. So those companies load the crude, they will sell it and collect the dollar and they will now leave it in the bank to collecting interest because everybody in NNPC are collecting bribes. So nobody really asks questions because everybody is compromised and are collecting bribe. Until the wahala will now start, which has started now, they will be running helter-skelter.
“So by the time they bring fuel, the marketers have taken advantage because of the scarcity. They’ve been selling above official price, so for you to get them to stop and bring the fuel it takes three, four weeks. The way I look at it there won’t be any fuel for Christmas. They are lying to the Baba (President Muhammadu Buhari). They are lying to him. It’s business as usual.”
A report by the Swiss non-governmental advocacy organisation, titled, “Swiss Traders’ Opaque Deals in Nigerian”, detailed how the NNPC connived with major Swiss oil trading companies to siphon billions of dollars of revenue from Nigeria through the sale of crude oil below the market value.
The Berne Declaration, which described the Nigerian oil scam as the greatest fraud Africa has ever known, said Nigerian and foreign fuel importers used their offshore subsidiaries, working with politically exposed fraudsters, to swindle the country of over $6.8 billion in phantom subsidy payments to non-existing importers between 2009 and 2011.
The report had identified seven major oil marketers and fuel importers, including the two Geneva-based commodity trading firms, as working through their shell companies in Switzerland and notorious offshore tax haven of Bermuda to defraud Nigeria of billions of Naira in tax earnings.
“Vitol and Trafigura alone took, respectively, 13.44% and 13.49% of Nigerian crude oil exports in 2011 for a cumulative value of 6.7 billion dollars,” the report said.
On August 26, 2015, in a statement signed by the spokesperson of the NNPC, Ohi Alegbe, the corporation stated that it has terminated the OPA deal with three companies, namely- Duke Oil Company Inc., Aiteo Energy Resources Limited and Sahara Energy Resources (Nig) Ltd and that it would soon advertise a “new Crude Oil Term” contract in both national and international print media for a period of one month in what has been carefully structured to weed out `briefcase companies’ and rent seekers.”
On November 3, 2015, the NNPC further announced that it had replaced the OPA with Direct Sale of Crude Oil –Direct Purchase of Products.
It stated that the move would “enshrine transparency and eliminate the activities of middlemen in the crude oil exchange for product matrix.”
According to the corporation, after evaluation of the OPA, it realized that “most of the 44 companies shortlisted for the next stage of the tender process only had affiliations to refineries abroad, a situation which introduces toll on the value chain.”
It contended that continuing the OPA amounted to a significant loss to the Federal Government and added it would only deal with companies with refineries after subjecting the refineries to due diligence analysis.
But our source said the corporation still relies on those discredited companies it vowed to stop doing business with and intends to continue with the crude swap arrangement it has with them till the end of the year.
When contacted Mr Alegbe delegated an official of the corporation to handle the inquiries.
The official, Micheal Mukwuzi, later sent us press statements previously released by the corporation including those we referenced earlier in this story.
Culled from Premium Times