Come Clean on Oil Swap Deals- Policy Alert Tells NNPC Ltd
Policy Alert, a civil society organisation working to promote economic and ecological justice in the Niger Delta, has called on the Nigerian National Petroleum Company (NNPC) Ltd to publish the traded volumes, payments received by government, and status of outstanding liabilities owed the federation from its oil-for-product swap deals with oil and gas commodity trading companies between 2010 and 2014.
The organisation made the call on Wednesday, November 23, 2022 during a follow-up engagement in Asaba with journalists it had recently trained on tracking the deals. Presenting initial findings from an ongoing research by the organisation, Policy Alert’s Senior Programmes Officer, Mfon Gabriel, observed that “the swap deals had been characterized by discretionary and undocumented contracting arrangements, absence of competitive bidding, secrecy, under-reporting, and tax avoidance, a situation that has allowed a number of politically exposed persons (PEPs) benefiting from these deals to escape the radar of public scrutiny. Our laws mandate the NNPC Ltd and the downstream regulator to promptly make details of all such new arrangements public.”
He also noted that during the five year period, billions of dollars worth of crude had been traded in poorly regulated and corruption-prone swap deals, adding that recent swap arrangements had not fared much better, as they had been characterised by under-delivery, unpaid tax liabilities and other violations that constitute revenue leakages to the Government of Nigeria.
Policy Alert listed the companies involved in the transactions as Trafigura, Aiteo, Televeras, Ontario, Duke Oil, Napoil and Calson, noting that by available records, only Aiteo and Televeras had cleared outstanding payments on the swap deals, adding: “Nigeria has been severely short-changed on all the variants of the swap deals introduced by the NNPC Ltd since the four refineries became inefficient and unproductive. Commodity trading companies have taken advantage of the absence of binding contracts with the NNPC to create arbitrariness in the deals. There are no records of sanctions on any official of the NNPC Ltd for the shortfalls recorded, nor has there been any diligent investigation and prosecution of any of the companies named in the shady deals.
“By reason of Nigeria’s membership of the Financial Action Task Force (FATF) and the Intergovernmental Action Group on Against Money Laundering in West Africa (GIABA) and the recently enacted Money Laundering (Prevention And Prohibition) Act 2022, financial institutions are mandated to conduct enhanced due diligence on transactions, especially where it involves Politically Exposed Persons (PEPs). The Nigerian Financial Intelligence Unit (NFIU) and the Economic and Financial Crimes Commission (EFCC) need to work with the financial system to track all unpaid funds from these deals, identify any PEPs involved with the companies, recover missing government revenue, and prosecute erring officials.
“We urge the NNPC Limited to fully publish all the traded volumes, payments received, and status of outstanding liabilities owed the federation from its oil-for-product swap deals between 2010 and 2014. The Federal Inland Revenue Service (FIRS) should also publish all outstanding tax liabilities owed by these companies within the period and disclose what measures it has put in place to recover these unpaid taxes. Furthermore, given the huge share of the extractive sector in overall government revenues, we call on the Corporate Affairs Commission (CAC) to adopt a risk-based approach to the collection of beneficial ownership information by further verifying data submitted by extractive sector companies, including commodity traders.”