Emmanuel Ibe Kachikwu is the Minister of State, Petroleum Resources and Group Managing Director
of the Nigerian National Petroleum Corporation, Maikanti Baru
Some indigenous companies not registered by the Corporate Affairs
Commission (CAC) have lifted Nigerian crude oil grades valued at $3.5
billion (about N1.1 trillion) in the last 10 months, an investigation by
Daily Trust on Sunday has shown.
Commission (CAC) have lifted Nigerian crude oil grades valued at $3.5
billion (about N1.1 trillion) in the last 10 months, an investigation by
Daily Trust on Sunday has shown.
A four-month enquiry into Nigerian and global corporate registries
by our reporter showed that the repeated failure by the Nigerian
National Petroleum Corporation (NNPC) to provide clear and accurate
identity of some companies it awarded multi-million dollar oil lifting
contracts this year is helping these companies to escape public
scrutiny.
by our reporter showed that the repeated failure by the Nigerian
National Petroleum Corporation (NNPC) to provide clear and accurate
identity of some companies it awarded multi-million dollar oil lifting
contracts this year is helping these companies to escape public
scrutiny.
This is even as the corporation prepares for another round of
award, as it had, in late October, issued a tender seeking companies to
engage in the lifting of Nigerian crude oil grades for the 2018/2019
term.
award, as it had, in late October, issued a tender seeking companies to
engage in the lifting of Nigerian crude oil grades for the 2018/2019
term.
The main problem started on January 3, 2017 when the NNPC announced
39 successful winners for its crude lifting contract that would run for
12 months. The announcement was followed by a release of the names of
the winners to newsmen and in a post on its official website.
39 successful winners for its crude lifting contract that would run for
12 months. The announcement was followed by a release of the names of
the winners to newsmen and in a post on its official website.
The names of the 18 beneficiary Nigerian companies were simply
given as Prudent Energy; Setana Energy; Emo oil; Bono; Optima Energy;
Shoreline Limited; AMG Petroenergy; A. A. Rano; Cassiva Energy and
Arkleen Oil and Gas Limited. Others are North West Petroleum;
Brittania-U; Hyde Energy; Eterna Oil and Gas; Masters Energy; MRS Oil
and Gas; Sahara Energy and Oando.
given as Prudent Energy; Setana Energy; Emo oil; Bono; Optima Energy;
Shoreline Limited; AMG Petroenergy; A. A. Rano; Cassiva Energy and
Arkleen Oil and Gas Limited. Others are North West Petroleum;
Brittania-U; Hyde Energy; Eterna Oil and Gas; Masters Energy; MRS Oil
and Gas; Sahara Energy and Oando.
Part of the mandatory pre-qualification requirement for the
Nigerian companies that applied for the contract as requested by the
NNPC was evidence of company registration issued by the CAC.
Nigerian companies that applied for the contract as requested by the
NNPC was evidence of company registration issued by the CAC.
Daily Trust on Sunday wrote to the CAC seeking information on the
registration statuses of the 18 indigenous companies that won the
contract. But the commission replied that it had no evidence of the
registration of seven of the 18 companies.
registration statuses of the 18 indigenous companies that won the
contract. But the commission replied that it had no evidence of the
registration of seven of the 18 companies.
It listed AMG Petroenergy Limited, Brittania-U, Cassiva Energy,
Hyde Energy, Masters Energy and Bono Energy Nigeria Limited as companies
that didn’t exist on its database.
Hyde Energy, Masters Energy and Bono Energy Nigeria Limited as companies
that didn’t exist on its database.
“If you have any document to support their registration, you may wish to forward them to us to enable us investigate further,” CAC’s reply dated September 26, 2017 and signed by Terver Ayua-Jor stated.
The name of the last company in the CAC response letter was
misspelled as Savana Energy instead of Sahara Energy as requested by
this newspaper.
misspelled as Savana Energy instead of Sahara Energy as requested by
this newspaper.
“That shows that the company is not registered, the name does not exist,” said an Abuja-based lawyer with experience in companies’ registration.
“You cannot build something on nothing,” the lawyer, who
did not want to be named, said about the legal implication of a company
not being registered, adding that Section 30, subsection 1 (a) of the
Companies and Allied Matters Act (CAMA) states that the CAC cannot
register companies with identical names.
did not want to be named, said about the legal implication of a company
not being registered, adding that Section 30, subsection 1 (a) of the
Companies and Allied Matters Act (CAMA) states that the CAC cannot
register companies with identical names.
A Freedom of Information (FOI) request dated August 9, 2017 to the
NNPC asking for the authentic names of the 18 indigenous companies as
well as their crude oil entitlements, has not been replied by the
corporation as at the time of filing this report.
NNPC asking for the authentic names of the 18 indigenous companies as
well as their crude oil entitlements, has not been replied by the
corporation as at the time of filing this report.
Some top NNPC officials responsible for crude sales approached for
confidential response to the discrepancies in the companies’ identities
also did not respond for months.
confidential response to the discrepancies in the companies’ identities
also did not respond for months.
The refusal to make information about the real identities of the
companies available contradicts provisions of the Public Procurement
Act, 2007, which is the legal framework for contract award and public
procurement in Nigeria.
companies available contradicts provisions of the Public Procurement
Act, 2007, which is the legal framework for contract award and public
procurement in Nigeria.
Section 38 (2) of the Act requires every procuring government
entity to, on request, make available the comprehensive record of
procurement proceedings to “(a) any person after a tender, proposal,
offer or quotation has been accepted or after procurement proceedings
have been terminated without resulting in a procurement contract.”
entity to, on request, make available the comprehensive record of
procurement proceedings to “(a) any person after a tender, proposal,
offer or quotation has been accepted or after procurement proceedings
have been terminated without resulting in a procurement contract.”
Independent analyses conducted through foreign corporate
registration databases like open corporate, fara.gov and websites of the
18 indigenous companies showed that the NNPC may have deliberately fed
the public with the incorrect legal names of entities to which it is
entrusting billions of dollar worth of oil sales.
registration databases like open corporate, fara.gov and websites of the
18 indigenous companies showed that the NNPC may have deliberately fed
the public with the incorrect legal names of entities to which it is
entrusting billions of dollar worth of oil sales.
For instance, a web-based search for ‘Cassiva Energy,’ one of the companies given by the NNPC as oil lifting contract beneficiary, showed that no entity exists as ‘Cassiva Energy.’ Instead, Casiva Limited was found.
Casiva Limited announced on its website, NNPC’s 2017/2018 crude off
take award to the company as one of the jobs it had executed. Also, AMG
Petroenergy, which the NNPC awarded the contract and the CAC said
didn’t exist in its database, has a company website named as AMG
Petroenergy Limited.
take award to the company as one of the jobs it had executed. Also, AMG
Petroenergy, which the NNPC awarded the contract and the CAC said
didn’t exist in its database, has a company website named as AMG
Petroenergy Limited.
“AMG is very well established in Nigeria’s oil and gas
downstream. Currently, AMG markets 90,000 barrels per day of crude oil
in the international market from the NNPC,” the website stated about the company’s business objectives.
downstream. Currently, AMG markets 90,000 barrels per day of crude oil
in the international market from the NNPC,” the website stated about the company’s business objectives.
Daily Trust on Sunday wrote to AMG Petroenergy Limited through the
main contact email address on its website, asking questions pertaining
to the exact name it signed the NNPC contract with, its crude
entitlements, as well as how it markets, transports or otherwise
disposes of the crude cargoes
main contact email address on its website, asking questions pertaining
to the exact name it signed the NNPC contract with, its crude
entitlements, as well as how it markets, transports or otherwise
disposes of the crude cargoes
it receives under its contract(s) with the commission, but the company did not reply.
Again, Brittania-U, one of the companies the CAC said didn’t exist in its database, has a website that announced the company as “a leader in Nigeria’s petroleum industry” and “a major player in the upstream and downstream sectors” operating in Nigeria for over 20 years as an indigenous integrated company.
“You can’t find Brittania-U Nigeria Limited? Please! Please!” Catherine
Uju Ifejika, chairman/chief executive officer of the company responded
in an irate tone when our reporter contacted her about why the company
could not be found in the CAC record.
Uju Ifejika, chairman/chief executive officer of the company responded
in an irate tone when our reporter contacted her about why the company
could not be found in the CAC record.
“I signed the contract (as Brittania-U Nigeria Limited). There is only one company that is Brittania-U Nigeria Limited,” Ifejika
said after reminding our reporter of her 35-year experience as a lawyer
and, therefore, couldn’t have made any mistake about the contract she
signed.
said after reminding our reporter of her 35-year experience as a lawyer
and, therefore, couldn’t have made any mistake about the contract she
signed.
“There is nobody in the industry that does not know Brittania-U as a group with almost seven companies in it,” she also added.
When she was told that the name emanated from the NNPC, Mrs Ifejika said, “It
is not the NNPC, you people (journalists) are the ones that make up
this state of confusion. Why would the NNPC give a company that is not
in existence?’’
is not the NNPC, you people (journalists) are the ones that make up
this state of confusion. Why would the NNPC give a company that is not
in existence?’’
In response to a question on why the NNPC published her company’s
name simply as Brittania-U, she said, “I don’t care what they (NNPC)
have out (published). I didn’t even look at what they have out. I signed
an agreement between myself, my company and the NNPC. The grand norm is
the agreement.”
name simply as Brittania-U, she said, “I don’t care what they (NNPC)
have out (published). I didn’t even look at what they have out. I signed
an agreement between myself, my company and the NNPC. The grand norm is
the agreement.”
A web-based search of ‘Masters Energy,’ another company in
the NNPC award list the CAC records showed didn’t exist, pulled Masters
Energy Oil and Gas Ltd instead, as the closest semblance to the latter
in Nigeria.
the NNPC award list the CAC records showed didn’t exist, pulled Masters
Energy Oil and Gas Ltd instead, as the closest semblance to the latter
in Nigeria.
Masters Energy Oil and Gas Ltd, according to the information in its website, was incorporated in Nigeria in 2005 to “operate fully in the oil and gas sector.”
It is as a member of Masters Energy Group owned by a Nigerian oil
magnate and politician, Mr. Uchechukwu Sampson Ogah, who, on June 27,
2016, was declared governor of Abia State by a Federal High Court in
Abuja, but a Supreme Court judgement truncated his ambition.
magnate and politician, Mr. Uchechukwu Sampson Ogah, who, on June 27,
2016, was declared governor of Abia State by a Federal High Court in
Abuja, but a Supreme Court judgement truncated his ambition.
Daily Trust on Sunday contacted the company’s spokesman, Emmanuel
Iheanacho, on the name of the entity or subsidiary/sister
company/companies the contract was directly awarded, including examples
of cargoes of Nigerian crude that the company traded prior to signing
the contract with the NNPC. Mr. Iheanacho acknowledged receipt of the
questions but replied in a text: “I cannot respond from where I am. Thanks so much for your professional approach,” explaining earlier that he was “out of office for the next three to four weeks,” so he couldn’t reply.
Iheanacho, on the name of the entity or subsidiary/sister
company/companies the contract was directly awarded, including examples
of cargoes of Nigerian crude that the company traded prior to signing
the contract with the NNPC. Mr. Iheanacho acknowledged receipt of the
questions but replied in a text: “I cannot respond from where I am. Thanks so much for your professional approach,” explaining earlier that he was “out of office for the next three to four weeks,” so he couldn’t reply.
Our reporter reached out to the other companies through an email
address or phone numbers on the websites that matched their companies’
names, but they did not respond to either say they received or did not
receive crude sales award from the NNPC in 2017.
address or phone numbers on the websites that matched their companies’
names, but they did not respond to either say they received or did not
receive crude sales award from the NNPC in 2017.
The spokesman of the NNPC, Ndu Ughamadu, promised to address the
questions raised in the August 9, 2017 FOI request, but response was
still being awaited as at press time.
questions raised in the August 9, 2017 FOI request, but response was
still being awaited as at press time.
The NNPC, however, had in January 2017 replied a query on similar matter, stating that it made the “difficult choice” not to publish the winners’ full names in an effort to protect them and “gullible buyers” from fraudsters.
Crude market and industry professionals, however, disagreed, saying
that in an oil market commonly marred by fraud and illegal sales,
precision around company identities is important.
that in an oil market commonly marred by fraud and illegal sales,
precision around company identities is important.
“I believe transparency is a major challenge in the Nigerian
business environment. It should be easy to know who the traders and
shippers are and their qualifications to undertake the tasks,” said Emeka Duruigbo, a professor of Energy and Business Law at Thurgood Marshall School of Law, Houston, Texas.
business environment. It should be easy to know who the traders and
shippers are and their qualifications to undertake the tasks,” said Emeka Duruigbo, a professor of Energy and Business Law at Thurgood Marshall School of Law, Houston, Texas.
“Corruption, ineptitude and inefficiency thrive in the midst of opacity,” Duruigbo, who has knowledge of the workings of the international oil market said.
How dodgy companies pocket margins from $3.5bn oil
The crude term sale contracts to companies, including those awarded
the 18 Nigerian oil companies, are among the most significant deals the
NNPC signs yearly because crude sales are government’s largest revenue
stream.
the 18 Nigerian oil companies, are among the most significant deals the
NNPC signs yearly because crude sales are government’s largest revenue
stream.
When in January 3, 2017, the corporation announced successful
winners for the contract, it also stated that all the companies
(excluding Duke Oil, NNPC subsidiary), were to receive 32,000 barrels
per day (b/d) of the Nigerian equity crude.
winners for the contract, it also stated that all the companies
(excluding Duke Oil, NNPC subsidiary), were to receive 32,000 barrels
per day (b/d) of the Nigerian equity crude.
Consequently, about 67.2 million barrels of Nigerian crude may have
been lifted from January to October 2017 by AMG Petroenergy Limited,
Brittania-U, Cassiva Energy, Hyde Energy, Masters Energy, Bono Energy
Nigeria Limited and Sahara, which are the seven companies that were not
found in the CAC database.
been lifted from January to October 2017 by AMG Petroenergy Limited,
Brittania-U, Cassiva Energy, Hyde Energy, Masters Energy, Bono Energy
Nigeria Limited and Sahara, which are the seven companies that were not
found in the CAC database.
The 67.2 million barrels of oil was arrived at after multiplying
32,000 barrels daily lifting by the seven companies for 10 months. The
NNPC, in a November 27 statement, quoted its Group General Manager,
Corporate Planning and Strategy, Mr. Bala Wunti, to have said that
average crude oil price between January and October 2017 was $52.49
barrels per day.
32,000 barrels daily lifting by the seven companies for 10 months. The
NNPC, in a November 27 statement, quoted its Group General Manager,
Corporate Planning and Strategy, Mr. Bala Wunti, to have said that
average crude oil price between January and October 2017 was $52.49
barrels per day.
Therefore, multiplying $52.49 by 67.2 million barrels crude shows
that the value of oil lifted by the seven companies with identity
problems may be worth as much as $3.5 billion in the market, or N1.1
trillion at the official exchange rate of N307 to a dollar.
that the value of oil lifted by the seven companies with identity
problems may be worth as much as $3.5 billion in the market, or N1.1
trillion at the official exchange rate of N307 to a dollar.
The margins collected by these companies from the sales of the $3.5
billion worth of oil are mind-boggling if Daily Trust on Sunday’s
calculation of the margins is anything to go by.
billion worth of oil are mind-boggling if Daily Trust on Sunday’s
calculation of the margins is anything to go by.
Market analysis shows that the NNPC sells the country’s crude share
to the trading companies at a discounted price, when compared to Brent
crude, the global crude benchmark.
to the trading companies at a discounted price, when compared to Brent
crude, the global crude benchmark.
Our reporter studied Argus and Platts, two of the leading global
commodity markets price producers and found that the official selling
price (OSP) the NNPC sets for Nigerian crude generally fluctuates, but
they are often lower than a barrel of Brent crude, the benchmark for
most of the oil produced in Africa.
commodity markets price producers and found that the official selling
price (OSP) the NNPC sets for Nigerian crude generally fluctuates, but
they are often lower than a barrel of Brent crude, the benchmark for
most of the oil produced in Africa.
Because some of these trading companies lack the financial and
operational wherewithal to sell the oil, they instead resell or ‘flip,’
the oil they receive to larger, more experienced commodity traders and
collect a margin on the sale.
operational wherewithal to sell the oil, they instead resell or ‘flip,’
the oil they receive to larger, more experienced commodity traders and
collect a margin on the sale.
According to findings by Daily Trust on Sunday, the standard margin
traders rake in is about $0.3-0.4 per barrel, although the margin may
vary considerably, depending on market conditions.
traders rake in is about $0.3-0.4 per barrel, although the margin may
vary considerably, depending on market conditions.
According to our estimates, each of the trading companies could be
reaping as much as $3.8 million ($0.4 per barrel) margin monthly on a
standard cargo load of 960,000 barrels (32,000 per day), depending on
what it negotiated in the crude marketing agreement with the NNPC.
reaping as much as $3.8 million ($0.4 per barrel) margin monthly on a
standard cargo load of 960,000 barrels (32,000 per day), depending on
what it negotiated in the crude marketing agreement with the NNPC.
A 2012 House of Representatives committee audit, led by
ex-lawmaker, Mr. Farouk Lawan, named some of these dodgy companies among
oil marketers that collected subsidy funds from the Federal Government
illegally. They were also listed as chronic tax defaulters to the
government.
ex-lawmaker, Mr. Farouk Lawan, named some of these dodgy companies among
oil marketers that collected subsidy funds from the Federal Government
illegally. They were also listed as chronic tax defaulters to the
government.
The Federal Inland Revenue Service (FIRS) relied on Section 14 (1)
(d) of the FOI Act to decline a Daily Trust on Sunday’s request for
information on the seven companies’ outstanding tax liabilities.
(d) of the FOI Act to decline a Daily Trust on Sunday’s request for
information on the seven companies’ outstanding tax liabilities.
“A public institution must deny any application that contains
information required of any taxpayer in connection with the assessment
or collections of any tax…” Wahab Gbadamosi, head of communications of the FIRS said.
information required of any taxpayer in connection with the assessment
or collections of any tax…” Wahab Gbadamosi, head of communications of the FIRS said.
There is no available public record that the companies made refunds
to the government, but the NNPC continues to award oil lifting
contracts to them.
to the government, but the NNPC continues to award oil lifting
contracts to them.
This investigation was supported by a grant from the Natural
Resource Governance Institute (NRGI). The NRGI had no editorial control
over the content.
Resource Governance Institute (NRGI). The NRGI had no editorial control
over the content.
-Culled from DailyTrust