President Buhari has received a report from Ibe Kachikwu, the group managing director of the Nigerian National Petroleum Corporation (NNPC), saying that the NNPC has already recovered $277 million during a review of crude oil swap deals under the previous government of Goodluck Jonathan.
The assessment continues, but so far $420 million is confirmed as the total amount due to Nigeria.
Out of that figure, $277m has been paid to the NNPC already, a statement from the presidency said, terming the crude swap deals “toxic”.
The Buhari administration has said that under the previous government the swap agreements, involving the exchange of crude oil for refined fuel, were notoriously fraudulent.
The NNPC said it had also begun the process of recuperating over $7bn in over-deducted tax benefits from oil companies.
Garba Shehu, presidential spokesman, also said the state oil company had ‘commenced Performance Measurement & Benchmarking as well as Value for Money Review of NNPC and the JV Companies covering the period 2008 – 2013′.
Shehu further cited the report as saying ‘a reputable International Accounting Firm has been engaged by the NNPC to determine the exact amount due government on the Strategic Alliance Contracts entered by NPDC, where up to $2.46 billion of government money is to be recovered’.
He said: “It (the report) also revealed that consequent upon an extensive investigation of the various toxic crude oil for refined products swap contracts, a total sum of $420 million has so far been reconciled in favour of NNPC and is now due for recovery from the legacy OPA/SWAP contracts. Out of the reconciled amount, the sum of $277 million has been recovered in lieu of products and the recovery effort is still ongoing, the source added.
“According to the report , the GMD of NNPC is committed to continued review of all existing contracts and addressing the ones that are not favourable to the Corporation. It was noted that significant cost reductions are also expected to ensure the Corporation remains profitable in the prevailing low crude oil price regime.
“He added that progress is being made toward bringing back the nation’s refineries to full production, noting that the management of the NNPC is working to ensure that this happens before the end of this year.
“If this is completed, the report said, it is expected to achieve an annual savings of about $1billion worth of foreign exchange from fuel import substitution and additional total saving of over $500 million annually will be made from the petrochemical products of Kaduna Refinery and Petrochemical Company.
“The report also disclosed that efforts at repositioning the NNPC have started yielding result on the nation’s economy. According to its content, gas supply to the power plants that had hitherto been handicapped by the supply of much-needed gas, has improved significantly from about 630 to 861 million standard cubic feet per day, which has resulted in a more steady power supply being witnessed in the country.
“Indeed, the report revealed that gas supply for power and peak generation have in recent times reached a historical high of 876 million standard cubic feet per day and 4,782 Mega Watts respectively.”
Crude oil swaps for refined petroleum products became controversial after concerned Nigerians such as Lamido Sanusi, the former governor of the Central Bank of Nigeria, and some regulatory agencies, principally the Nigeria Extractive Industries Transparency Initiative, criticised the deals as lacking transparency and accountability.
President Buhari has recently cancelled all oil swap deals agreed by his predecessor Jonathan.
