Nigeria lost $1.1 billion between 2011 and 2012 to crude oil for product swap arrangement, it was said yesterday.
In addition, one of the companies involved in the swap arrangement, had no record of imported petroleum products in contravention of the agreement.
At the opening of House of Representatives Zakari Mohammed-led ad hoc Committee investigating the oil swap deals, the Nigerian Extractive Industry Transparency Initiative (NEITI) said the arrangement that began in the middle of 1980 was focused until it became compromised.
To mitigate price vulnerability, shortages in product availability and guarantee steady supply nationwide, in September 2010, the Nigerian National Petroleum Corporation (NNPC) entered into crude for product exchange arrangement (swap) and Crude oil Offshore Processing Arrangement (OPA) with five companies.
NEITI’s Acting Executive Secretary, Ogbonaya Orji in his presentation, said the arrangement was flawed.
“Between 2010 and 2012, the NNPC exchanged a total of 539,029 bbls. For instance in 2012, the cost of the crude oil that was swapped was $6.4b while the value of refined products returned to the country in exchange for the swapped crude was $6.3b.
“By this singular transaction, the nation lost about $100m.
“These transactions are not an efficient use of Nigeria’s oil. When one compares the total costs of these arrangements (crude, processing fees, freight, demurrage, inspection and insurance) with reported prices for PMS, DPK and AGO, large losses result,” he said.
According to the NEITI report, through the swap and offshore processing arrangements, Nigeria lost an estimated $1,109,235,267.03 between 2011 and 2012.
On way forward, Orji advised that the NNPC should discontinue the OPA and product exchange deals and concentrate on direct refined product importation as short term measure.
In his presentation, Chairman of the Federal Inland Revenue Service (FIRS) Babatunde Fowler, said some companies involved in the arrangement owed the Federal government N1.1b in tax arrears.
An attempt by a Non-Govermnetal Organisation (NGO) Center Rule of Law to abort the investigative hearing was rebuffed by the committee.
Counsel to the NGO, Sam Ogala told the Committee that there was a suit against the investigative hearing which the committee was aware of.
He said to continue with the investigation would amount to comtempt of the court by the committee.