The decision of Nigerian National Petroleum Corporation (NNPC) to award the Direct Sale, Direct Purchase (DSDP) contracts whereby crude oil is swapped for petroleum products using middlemen has exposed the extent the corporation is going to ensure Nigerians remain hooked on cheap fuel.
Under the DSDP contracts introduced by the NNPC in 2015 as a replacement for the controversial SWAP contracts, the corporation exchanges crude oil worth about $26 million a day at current oil prices with a selected group of international and local traders which, in turn, supplies NNPC with refined petroleum products.
The latest set of winners announced for the crude oil lifting contracts had the names of ‘who is who’ in the oil and gas sector in the country as well as top players in the international oil and gas industry who are compelled to partner with the local players.
Sources in the petroleum sector are querying the modalities employed by NNPC in selecting those companies that are qualified to participate in the DSDP programme.
Some of the companies that won the bid, according to sources, are “briefcase investors” that suddenly became oil companies and crony capitalists. They lamented that many of the companies that have made investment in the country but are currently struggling to survive because of the government’s policy were completely edged out of the exercise despite having the basic qualification of foreign partnership, local presence, access to local refinery, access to local financing and guarantee system.
Some of the participants in the programme who were not successful wondered why the NNPC had to pick companies that have no stake in the Nigerian economy. They specifically wanted to know the rationale behind the choice of Total SA, a trading arm of Total Group which has no base in Nigeria, as against Total Nigeria plc which employs thousands of Nigerians.
Ademola Henry, team leader at the Facility for Oil Sector Transformation (FOSTER), said nobody knows the board of trustees, governance process or real owners of some of the companies because some of them are politically affiliated to the president and are being rewarded for any favour they might have rendered.
“Let the free market determine who can bring in petrol, get rid of the whole subsidy initiative,” Henry said.
Sources told BusinessDay that some of the local companies were paired with foreign companies in order not to give a false impression that foreign companies are the only ones benefiting from the deal.
Responding to allegations of shady dealings, Ndu Ughamadu, group general manager, Group Public Affairs Division of NNPC told BusinessDay that the corporation stuck to the rules and regulations during the selection process of the companies.
“We are not aware of these complaints, we stick to the guidelines,” Ughamadu said.
NNPC guidelines stipulates that an indigenous company engaged in Nigerian oil and gas downstream activities with trading of petroleum product expertise is qualified to participate in the programme.
“Indigenous companies applying under category (c) of Section 3 shall meet the minimum turnover of US$400 million (or the Naira equivalent) and net worth of US$200 million (or the Naira equivalent),” the guidelines seen by BusinessDay stated.
The deal, which involved 445,000 bpd of Nigeria’s crude oil originally meant for domestic refining, is worth an estimated $9.4 billion every year based on the current prices of crude oil in the international market. Winning an oil lifting deal is seen as winning the Nigerian lottery. Only the politically-connected often do.
Among those that benefited from the contracts was Casiva Limited, whose chairman, Nasiru Danu, was director of logistics for the Buhari Campaign Organisation in the 2019 presidential election.
Eterna plc has Lamis Dikko as its chairman and Mahmud Tukur as managing director/CEO. Tukur is the son of a former national chairman of the People’s Democratic Party (PDP), Bamanga Tukur.
Arkleen Oil & Gas Ltd was founded by Gregory Ero who worked with Federal Ministry of Petroleum Resources as head of the Department of Petroleum Resources (DPR), Warri, 1974-1977. Between 1977 and 1988, he was branch superintendent, NNPC, Warri, and head, NNPC Central Purchasing and Supply Department.
Rainoil Limited was founded by Gabriel Ogbechie, a graduate of Production Engineering from the University of Benin with almost three decades’ experience in Nigeria’s oil and gas industry.
Amazon Energy has Trevor Akindele, a consultant with over 20 years’ experience in crude oil and petroleum products trading and operations in Nigeria, as its chairman, while Matrix Energy’s MD/CEO is Abdulkabir Aliu. Aliu is the pioneer Group CEO and a founding member, according to the company’s website.
Levene Energy Development Limited is a subsidiary of Levene Energy Group whose group chairman, Asue Ighodalo, is also the founding and managing partner of Banwo & Ighodalo, one of Nigeria’s reputable law firms.
UTM Offshore Ltd has as its GMD/CEO Julius Rone, a Warri man who is also an alumnus of the Obafemi Awolowo University and University of Calabar, while Masters Energy Oil & Gas has Nigeria’s current minister of state for mines and steel development, Uchechukwu Ogah, as its president, although Vincent Ajala serves as executive vice chairman.
MRS Oil & Gas Company is a subsidiary of MRS Holdings Limited, founded by Sayyu Dantata. Patrice Alberti was appointed as the chairman of the company following the resignation of Dantata in July 2017.
Further findings revealed Yakubu Maishanu is the chairman/CEO of AYM Shafa Ltd; Adamu Maikifi, chairman of AY Maikifi Oil & Gas Co. Ltd; Auwalu Rano, chairman/CEO of A.A. Rano Nigeria Ltd; Wale Tinubu, group managing director at Oando plc, and Uju Ifejika, chairman/CEO of Brittania-U Nigeria Ltd.
Meanwhile, five of the indigenous companies, Barbedos Oil & Gas Services Ltd, Petrogas Energy, Bono Energy Limited, Petratlantic Energy Limited and Eyrie Energy Ltd, failed to disclose their board of directors and management team on their websites.
BusinessDay sent an email to five of the companies to get necessary information about their board members but none responded.
In the current administration, Mele Kyari is the group managing director of NNPC while President Muhammadu Buhari is the minister of petroleum resources. Between them, they wield a powerful capacity to dish out political patronage in the oil and gas sector because of the control they have on who gets to participate in these oil-lifting contracts deals.
Full list of those shortlisted for the contracts include BP Oil International Ltd/AYM Shafa Ltd; Vitol SA/Calson-Hyson; TOTSA Total Oil Trading SA/Total Nig plc; Gunvor International B.V/AY Maikifi Oil & Gas Co Ltd; Trafigura PTE Ltd/A.A. Rano Nig. Ltd; Cepsa S.A.U/Oando plc, and Mocoh SA/Mocoh Nig Ltd.
Others are Litasco SA/Brittania-U Nig. Ltd/Freepoint Commodities; MRS Oil & Gas Company Ltd; Sahara Energy Resources; Bono Energy Ltd/Eterna plc/Arkleen Oil & Gas Ltd/Amazon Energy; Matrix Energy Ltd/Petratlantic Energy Ltd/UTM offshore Ltd/Levene Energy Development Ltd; Mercuria Energy Trading SA/Barbedos Oil & Gas Services Ltd/Rainoil Ltd/Petrogas Energy; Asian Oil & Gas PTE Ltd/Eyrie Energy Ltd/Masters Energy Oil & Gas Ltd/Casiva Ltd, and Duke Oil Company Incorporated.
Nigeria is largely dependent on imported fuel because it has been unable to make its three refineries with a nameplate capacity of about 445,000 barrels per day to work. The refineries have a combined capacity utilisation of less than 20 percent and have been making losses for more than two decades.
OLUSOLA BELLO & DIPO OLADEHINDE
