$3bn debt necessitated oil swap deal, says ex-NNPC boss, Oniwon

17 February 2016, Abuja—Former Group Managing Director, GMD, of Nigerian National Petroleum Corporation, NNPC, Austen Oniwon, told the House of Representatives ad-hoc committee on Crude Oil Swap probe that a debt of over $3 billion necessitated the oil swap deal entered into by Nigeria and that he was entitled to a spending limit of $10 million.

*Barrel of oil.

*Barrel of oil.

Oniwon, who served as GMD of NNPC from 2010-2012, made the revelations when he appeared before the Committee headed by Zakari Mohammed  (APC, Baruten/Kaima Federal Constituency, Kwara).

According to Oniwon, shortage of cash flow in the system also made it imperative for the corporation to look for alternative ways to remedy the situation in the country.

He said:  “I met a debt of over $3 billion when I took over as Group Managing Director and it became a primary responsibility to see what I can do, because our cash flow was in serious trouble to the extent that we could no longer service the federation account and pay for products. “We had to look at options available and opted for oil swap because of the cashless situation by using the services of our creditors.”

He said the perilous situation of the three refineries in the country —Warri, Port-Harcourt and Kaduna— which were supposed to produce 125,000, 210,000 and 110,000 barrels of crude respectively, bringing it to a total of 445,000 daily, informed the need to sell the crude and convert to refined products to enable the NNPC supply same to the nation.

Responding to a question on if he was the initiator of the oil swap, Oniwon said it did not begin with him as there was an oil swap agreement between the country and the Kingdom of Saudi Arabia entered into in 1989.

He explained:  “No, it is not the first time we are going into an oil swap agreement. I recall that there was one entered into with Saudi Arabia in 1989. The reason then was that our crude was not suitable for the production of lubricants.”

The former GMD dispelled insinuations that the swap deal was marked by irregularities and did not meet its proposed objective, noting that the country experienced zero fuel queues through out the period because of the oil swap deal.

Asked why he failed to allow Duke Oil to go through competitive bidding, Oniwon explained that it was difficult to do that as NNPC was heavily indebted as at that period.

I had approval limit of $10m

Meanwhile, Oniwon in response to a question by one of the committee members, said he was entitled to a $10 million approval limit as GMD.

On his part, a former GMD, Mr Andrew Yakubu, said when he came on board on June 26, 2012, the oil swap contract was already in place, but noted that he set up a committee to review the contract, with a view to making it more profitable to Nigeria.

Yakubu explained that after the committee concluded its work and turned up its report, he submitted same to the then Minister of Petroleum Resources but the minister did not get back to him up till the time he left office on August 1, 2014.

He said the key areas of the report was a review of the contract value and how it would affect the lives of Nigerians positively.

The former GMD further explained that based on available records, the 445,000 barrel per day requirement for Nigeria, when added together, would give 17 million litres, which was less than the 35 million litres requirement per month.

In his response  to a question on tenure of office for a GMD, Yakubu said there was need for a tenure to avoid constant policy somersault as obtained each time a new NNPC boss was appointed.

Yakubu said during his tenure, he ensured that all the four refineries in Kaduna, Warri and Port Harcourt were operating optimally. This, according to him, eased the problem of oil scarcity in the country while he was in office.

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