Trafigura didn’t fulfil crude swap deal terms – Customs

20 January 2015, Abuja – The House of Representatives heard on Tuesday that the country could have been short-changed by the Nigerian National Petroleum Corporation and trading firms in the execution of the controversial crude for refined products’ swap contracts to the tune of billions of dollars.

Crude oil4Specifically, the Nigeria Customs Service made a shocking presentation to an ad hoc committee of the House that one of the major trading firms, Trafigura, did not return the refined equivalent of the 12 million metric tonnes of crude oil it took out of the country under the controversial crude swap for refined products’ deal.

The deal involves the exchange of crude oil for refined petroleum products in which the corporation gives out 445,000 barrels of crude per day to trading companies.

At the public hearing on the deal in Abuja on Tuesday, the Nigerian Extractive Industries Transparency Initiative also alleged that inefficiency in the management of the deals cost the country over $1.1bn between 2011 and 2012 alone.

The committee is chaired by an All Progressives Congress lawmaker from Kwara State, Mr. Zakari Mohammed.

“From our records, out of 12mmt of crude exported by Trafigura, none was returned as refined product to our knowledge,” Mr. Andrew Sule, who represented the Comptroller-General of Customs, informed the committee.

Sule also claimed that the NCS was not officially aware of the crude swap transactions, adding that by global standards, the agency should be informed for the purpose of keeping statistics.

He, however, observed that it was possible that the company returned the product under a different name, which could raise other legal issues like non-disclosure or attempts to evade scrutiny.

Sule added that though under the petroleum products’ import policy, duty payment did not apply to the products, it was still within the jurisdiction of the NCS to be given details of all transactions for record purposes.

NEITI’s Acting Executive Secretary, Dr. Ogbonanya Orji, told the committee that losses from the swap deals amounted to $607.2m, while an aspect of the Offshore Processing Arrangements recorded $501.9m in losses.

Orji added that the figures were aside the huge indebtedness of the NNPC on direct importation of refined products in excess of $3bn.

He stated that NEITI had to advise in its 2012 report that NNPC should discontinue the transactions but to no avail.

“The huge revenue loss to the nation could otherwise be channelled towards infrastructure development. The NNPC should discontinue the OPA and product exchange deals and concentrate on direct refined product importation as a short-term measure,” NEITI’S submission read in part.

On its part, the Federal Inland Revenue Service told the committee that Trafigura never filed any tax returns with the agency.

This disclosure came from the Executive Chairman of the FIRS, Mr. Tunde Fowler.

“Trafigura has never filed any returns with the FIRS and is therefore in breach of relevant provisions of our tax laws, particularly Section 55(1) of the Companies Income Tax Act, Cap C21, Laws of the Federation of Nigeria, which requires any company that carries on business in Nigeria to file returns on its income derived in Nigeria,” Fowler added.

A group, Centre for Rule of Law, had attempted to halt the hearing by saying that it had filed a suit in court stopping the House from conducting the investigation.

According to its spokesperson, Mr. Samuel Igala, the suit was filed at an Abuja Federal High Court, where the group sought relief, including that “all parties should stay action pending the determination of the substantive suit.”

But, Mohammed overruled him, arguing that several court judgements abound to the effect that “no arm of government can stop another one from performing its duties.

  • Vanguard
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