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SDIC Raises Alarm Over NNPC Shady $1.1b Crude Oil Swap Deal

The Social Development Integrated Centre [SDIC], a social action group, has raised alarm over the Nigerian National Petroleum Corporation (NNPC) move to swap “some 300,000 barrels of crude oil per day for gasoline and diesel”.

In a statement signed by the Programme Officer of SDIC, Mr. Botti Isaac, the group also lamented the lack of transparency enshrouded in the deal.

In a statement issued on Friday titled, “Shady Oil Deal; Swapping For Nothing”, Mr. Isaac stated that the deal “is causing the nation a massive $1.1 billion dollars loss annually”.

He, thereby, called “for the immediate cancellation of all oil swap deal contract by the NNPC”.

 He also called for concerted “effort [to] be directed at improving the local production capacity of the country’s refineries particularly at this period when there is strong need to revitalize our ailing economy for the overall benefit of all Nigerians.”

The statement reads in full:

In spite of the consistent outcry against oil swap deals by the Nigerian National Petroleum Corporation (NNPC) owing to the unprecedented level of corruption in the processes, it is disturbing that the NNPC is still bent on signing a $6 billion oil swap deal to exchange some 300,000 barrels of crude oil per day for gasoline and diesel.

This act, according to the Nigeria Extractive Industry Transparency Initiative (NEITI) is causing the nation a massive $1.1 billion dollars loss annually. 

This loss is due to the opaqueness of the oil swap process thereby leading to the short-changing of accruable revenue to the government.

While the NNPC has argued that there is need for oil swap to meet the local consumption demand due to the low production capacity of the refineries, it is, however, clear that the process lacks transparency. 

The exact production capacity of the nation’s refineries is unknown as well as the exact quantity of crude being swap. 

The NNPC has continued to allocate excess crude to itself for local production despite the weak production capacity of the nation’s refineries. 

In many occasions also and owing to the non-transparent process, what is expected is not usually delivered as these unscrupulous individuals and entities pocket proceeds from the barrels while some outrightly divert the crude allocated to them and neither import any product nor make remittances to the government.

We recall that in February 2016, the Minister of Petroleum, Mr Ibe Kachikwu had announced that oil swap policy will be replaced by March of 2016, with a new policy of Direct-Sales-Direct-Purchase (DSDP). 

A policy which he said will end the corrupt regime of oil swap and bring about transparency in the oil bidding process. 

We are concerned and indeed worried that one year after this proclamation, NNPC is still going ahead to sign a $6 billion oil swap deal.

Social Action is further concerned that the continuous allocation of 445,000 barrels per day to local refining by NNPC, when in fact the country’s refineries produce far less than 100, 000 barrel per day, is a deliberate attempt by NNPC to divert the remaining crude in unexplainable swap deals and thus continue to short-change and defraud the country of its rightful earnings.

It is pertinent to also point out that the country is losing so much in revenue from the crude value chain via the process of oil swap; there are over 44 products in a barrel of crude, however, in the shady oil swap deal, only two products are returned with the country forfeiting returns on the other products. 

This is a huge setback to both human capital and infrastructural development of the country.

We hereby call for the immediate cancellation of all oil swap deal contract by the NNPC while effort be directed at improving the local production capacity of the country’s refineries particularly at this period when there is strong need to revitalize our ailing economy for the overall benefit of all Nigerians.

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