The House of Representatives on Monday despatched a letter to a former Minister of Petroleum Resources, Mrs. Diezani Alison-Madueke, asking her to explain how she extended contracts for crude oil worth $24bn without valid agreements.
The Chairman of the House Ad hoc Committee on Crude Oil Swap, Mr. Zakari Mohammed, confirmed on Monday that a letter had been sent to Alison-Madueke to appear before the committee on March 2.
“Yes, she has been asked to come on March 2. The letter left the secretariat today, February 22 (yesterday),” Mohammed stated.
He said the letter was routed through the office of the Group Managing Director of the Nigerian National Petroleum Corporation, Dr. Ibe Kachikwu.
Two firms, Duke Oil and Tranfigura, were given the swap contracts in 2011 under the controversial crude-for-refined products (swap) deals the NNPC executed between 2010 and 2014.
The NNPC was allocated 445,000 barrels of crude daily to refine for domestic consumption.
However, owing to the failure of the country’s three refineries to function, the corporation resorted to exchanging part of the crude for refined products by engaging Duke Oil and Tranfigura.
Incidentally, Duke Oil is a subsidiary of the NNPC while Tranfigura is an offshore firm trading in Nigeria’s crude but does not pay tax to the Federal Government.
The Mohammed-led committee, which is investigating the deals, heard last week that Duke Oil and Tranfigura got an initial swap contracts in 2010 to last one year.
However, after the contracts expired in 2011, the former minister reportedly ordered an “extension” of the contracts, to run till 2014, but did not sign any valid agreements with the firms.
Three former GMDs of the NNPC – Mr. Austin Oniwon, Mr. Andrew Yakubu and Mr. Joseph Dawha – had appeared before the committee last week in Abuja to admit that the crude exchange took place without formal contracts.
“There was an approval for the extension by the minister; I believe the records are with the NNPC,” Oniwon, who was the first to appear before the panel, told the committee.
On his part, Dawha revealed that Duke Oil lifted 210,000 barrels of crude daily, while Tranfigura loaded 90,000 barrels” per day.
“Thus, as of August 2014, when I assumed office, the contracts were being run long after they had expired,” he added.
For Yakubu, he disclosed how he sent a report to Alison-Madueke on the need to review and formalise the contracts, but that the report “never came back to me from the minister.”
Speaking on the documents the committee had directed the former minister to produce, Mohammed said they included “full brief on all swap arrangements, a proof of Federal Executive Council’s approval, the NNPC board resolution on the contracts, evidence of the approval limit of the board and that of the minister of petroleum resources and that of the GMD.”
Mohammed explained that the FEC approval was necessary because by regulations, the approval limit of a minister was N100m, while higher amounts like the controversial $24bn would require the approval of FEC.
Dawha, who was the last GMD to serve under Alison-Madueke, had explained how he later ended the swap deals because they were “abnormal.”
He admitted that in the 27 years he served as an employee of the NNPC, there was never a period in the history of the corporation that such arrangements were allowed.
Dawha told the committee that his immediate decision was to seek a legal opinion on how to correct the anomaly following which he wrote Alison-Madueke on the need to sign legally-binding contracts with the companies.
The former GMD said Alison-Madueke approved his proposal to formalise the contracts.
“Upon receipt of the minister’s approval granted in August 2014, the contracts were formally extended to cover the periods from their respective dates of expiry until the end of December 2014,” he added.
Dawha explained that incorporated in the new contracts was an agreement to end the swap arrangements on their expiration, and migrate fully to Offshore Processing Agreement, which involved the direct processing of crude for refined products.
