“Diezani Approved $24bn Crude Swap Without Formal Contract.” – Ex-NNPC GMD


A former Group Managing Director of the Nigerian National Petroleum Corporation, Mr. Austin Oniwon, revealed on Tuesday that the former Minister of Petroleum Resources, Mrs. Diezani Alison-Madueke did not formally award the contract between the NNPC and trading companies that lifted $24bn (N7.2trn) worth of crude oil from the country between 2011 and 2014.

This was revealed even as the House of Representatives continues its investigation into the crude oil for refined products swap programme of the last administration.

Oniwon told the House of Representatives Ad Hoc Committee on Crude Oil Swap headed by Zakari Mohammed  (APC, Baruten/Kaima Federal Constituency, Kwara), that a former Minister of Petroleum Resources, Mrs. Diezani Alison-Madueke, merely granted the “extension” of an earlier contract, adding that a debt of over $3 billion necessitated the oil swap deal entered into by Nigeria and that he was entitled to a spending limit of $10 million.

Oniwon initially insisted that there were no breaches in the swap deal during his tenure but when questioned by the members of the committee, he however admitted that the Minister approved the extension of the contracts without formality.

Also See: ”EFCC To Probe Diezani, Okonjo- Iweala Soon”-Magu

In Oniwon’s words;

There was an approval for the extension by the Minister. I believe the records are with the NNPC.

Mr. Austin Oniwon said the initial contract expired in 2011 during his tenure, which lasted from May 2010 to June 2012.

Reports say NNPC entered a deal with crude oil trading companies, Duke Oil Company Incorporated and Trafigura Ltd, to swap crude for refined products, when Nigeria’s refineries failed.

Both companies had substantive contracts which lasted from October 2010 to October 2011, when the contracts elapsed. They however continued to lift crude oil till December 2014 without formal agreements. In the period, Duke, a subsidiary of the NNPC, and Amsterdam-based Trafigura, lifted crude worth $24 billion.

According to Oniwon, shortage of cash flow in the system also made it imperative for the corporation to look for alternative ways to remedy the situation in the country.

He said:

I met a debt of over $3 billion when I took over as Group Managing Director and it became a primary responsibility to see what I can do, because our cash flow was in serious trouble to the extent that we could no longer service the federation account and pay for products.

We had to look at options available and opted for oil swap because of the cashless situation by using the services of our creditors.

He said the perilous situation of the three refineries in the country —Warri, Port-Harcourt and Kaduna— which were supposed to produce 125,000; 210,000 and 110,000 barrels of crude oil respectively, bringing it to a total of 445,000 daily, informed the need to sell the crude and convert to refined products to enable the NNPC supply same to the nation.

The former GMD dispelled insinuations that the swap deal was marked by irregularities and did not meet its proposed objective, noting that the country experienced zero fuel queues through out the period because of the oil swap deal.

Read Also: “Getting Evidence To Probe Diezani Has Not Been Easy”- Buhari.

Oniwon’s successor, Mr. Andrew Yakubu, also appeared before the committee to say that he made efforts to review the swap arrangement with a view to correcting noticeable lapses, but that he was frustrated.

Yakubu, who assumed office as GMD on June 27, 2012, disclosed that he set up a team of experts from the legal and corporate divisions of the NNPC to carry out the review after which he sent a report to Alison-Madueke in April 2014 but never received a response until his removal (as GMD) was announced by 9pm on August 1, 2014.

Yakubu advised the National Assembly to give more protection to the headship of the NNPC as a national oil company so that it could perform optimally at all times.

He noted that the current set-up, whereby the GMD’s tenure was left to the pleasure of the appointing authorities, called for an urgent review.

The committee directed the NNPC to search its records and produce Yakubu’s report.

Members also asked the corporation to produce evidence of the extension of the contract Alison-Madueke granted without a formal contract.

Read Also: Diezani Responds To Accusations Of Fraud, Says N2.8bn Vanished Under Buhari’s Nose.