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$24 bn non-formalized contracts .. Nigeria’s former Oil Minister, Diezani Alison-Madueke to appear before House Committee

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The Nigeria’s former Minister of Petroleum Resources, Mrs. Diezani Alison-Madueke has been invited by to appear before a committee of the House of Representative on March 2. The Committee is investigating allegations of contract extensions in the country’s national energy company, NNPC, worth $24 billion

Alison-Madueke to produce
“full brief on all SWAP arrangements, a proof of Federal Executive Council’s approval, the NNPC Board Resolution on the contracts, evidence of the approval limit of the board and that of the Minister of Petroleum Resources and that of the GMD.” – 
Mr. Zakari Mohammed, Chairman House Committee on Crude Oil Swap,

Diezani Allison-Madueke 6.jpg
Mrs. Diezani Alison-Madueke Nigeria’s former energy Minister

Nigeria’s former Oil Minister, Allison Allison-Madueke has been accused of unilaterally approving the extension of service contracts with the corporation’s external vendors worth $24 bn. The Chairman of the House Ad hoc Committee on Crude Oil Swap, Mr. Zakari Mohammed, confirmed on Monday that a letter had been sent to Alison-Madueke to appear before the committee on March 2.
The Committee, has been investigating SWAP, a process whereby the Nigerian National Petroleum Corporation (NNPC), traded crude petroleum for refined products. Last week the Committee heard that contractors, Duke Oil and Tranfigura got initial SWAP contracts in 2010, to last one year.
However, at the contract expiration in 2011, the former minister reportedly, breached due process and ordered an “extension” of the contracts, to run till 2014, without going through the vetting processes required for such  contract extensions. No formal contracts were signed, either.
While appearing before the Committee last week, three past Group Managing Directors of the NNPC; Austin Oniwon, Andrew Yakubu and Joseph Dawha all admitted that the SWAP was executed without formal contracts.
“There was an approval for the extension by the minister; I believe the records are with the NNPC,” stated Oniwon, the first to appear before the panel. Dawha then told the Committee that Duke Oil lifted 210,000 barrels of crude daily, while Tranfigura loaded 90,000 barrels” per day, adding: “Thus, as of August 2014, when I assumed office, the contracts were being run long after they had expired”.
Yakubu, also told the Committee, he sent a report to Alison-Madueke on the need to review and formalize the contracts, but that the report “never came back to me from the minister.”
Speaking on the documents the committee had directed the former minister to produce, Mohammed said they included “full brief on all SWAP arrangements, a proof of Federal Executive Council’s approval, the NNPC Board Resolution on the contracts, evidence of the approval limit of the board and that of the Minister of Petroleum Resources and that of the GMD.”
Mohammed explained that the Federal Executive Council (FEC), approval was necessary because by regulations, the approval limit of a minister was N100million, while higher amounts like the controversial $24billion would require the approval of the FEC.
Dawha, who was the last GMD to serve under Alison-Madueke, had explained how he later ended the swap deals because they were “abnormal.” He admitted that in the 27 years he served as an employee of the NNPC, there was never a period in the history of the corporation that such arrangements were allowed.
He  further told the committee that he sought legal opinion on rectifying the anomalous SWAP arrangement following which he briefed the minister on the need to sign legally-binding contracts with vendor companies. “Upon receipt of the minister’s approval granted in August 2014, the contracts were formally extended to cover the periods from their respective dates of expiry until the end of December 2014,”
The new contracts incorporated an agreement to end the swap arrangements on their expiration, and migrate fully to Offshore Processing Agreement, which involved the direct processing of crude for refined products.


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