Why NNPC Should Come Clean on Oil Swap Deals, Says Policy Alert

Omon-Julius Onabu in Asaba

The Nigerian National Petroleum Company Limited (NNPCL) has been called upon 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 particularly between 2010 and 2014.

Policy Alert, a civil society organisation working to promote economic and ecological justice in the Niger Delta region of Nigeria, made the call during a follow-up engagement in Asaba with journalists it had recently trained on tracking the deals.

The organisation recently organised a two-day capacity building workshop for the media and CSOs in Uyo, the Akwa Ibom State capital, with the theme ‘Tracking Beneficial Ownership Data on Nigeria’s Oil Swap Deals’.

The training workshop dwelt extensively on citizen collaboration with relevant national agencies and authorities towards a more transparent and accountable oil and gas revenues in Nigeria through better policy and programme implementation.

However, presenting initial findings from an ongoing research by the organisation at the Asaba exercise, Policy Alert’s Senior Programmes Officer, Mfon Gabriel, highlighted the existence of certain undesirable gaps in the country’s swap deals that require undelayed rectification.

“The swap deals had been characterised 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,” he observed, adding, “Our laws mandate the NNPC Ltd and the downstream regulator to promptly make details of all such new arrangements public.”

Mfon also noted that during the five-year period, billions of dollars worth of crude had been traded in poorly regulated, opaque and corruption-prone swap deals, stressing that recent swap arrangements had left much to be desired.

Recent swap arrangements had been “characterised by under-delivery, unpaid tax liabilities and other violations that constitute revenue leakages to the Government of Nigeria,” he pointed out.

According to Policy Alert, the companies involved in the transactions include Trafigura, Aiteo, Televeras, Ontario, Duke Oil, Napoil and Calson, referencing available records to note that only Aiteo and Televeras had cleared outstanding payments on the swap deals.

“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, neither 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,” Policy Alert said.