NNPC OFFICAL PROTESTS AGAINST FRAUD …IN CRUDE OIL PRICING

The Nigerian National Petroleum Corporation is witnessing an unusual blowout over as a chief executive officer of one of its subsidiaries makes a move to upturn a long standing tradition that allows the nation to lose billions of dollars to a particular international crude oil trader with the active support of senior officials of the Corporation, even as the Corporation had signed a skewed joint venture agreement with the international trader.

By a letter of 24 March, 2010, the Chief Executive Officer of Carlson (Bermuda) Limited, a subsidiary of NNPC responsible for part of the nation’s crude oil trading, Mrs. Aisha Abdulrrahman, addressed to Mr. Paul Greenslade, the Chief Executive of Vitol Sa Geneva, Mrs. Abdulrraham informed her other number at Vitol SA Geneva of the intention of her company to trade crude oil in the open market.

The letter reads thus:
“This is to notify of you of our intention to trade our crude oil cargoes at competitive price in the open market, starting with May 2010 cargoes.
“Please note that Carlson is willing to continue selling some of our cargoes to VITOL at competitive price.

“We thank you in advance for your patronage,” the letter concludes.

This letter must have caused a literal quake within the structure of the NNPC, Abdulrahhman was departing from a more than 17-year tradition of fleecing Nigeria through under pricing of her crude oil by what oil industry experts describe as a questionable joint venture between the NNPC and VITOL SA Geneva which established Calson (Bermuda) Limited with senior officials of the Corporation cornering the shortfall in the crude oil pricing. At the fore of this opposition is Mr. Aminu Babakosa, NNPC’s Group Executive Director, Commercial and Investment.

Using Calson to Fleece Nigeria
Calson was ostensibly set up to market Nigerian Petroleum Products and Crude Oil to the West and Central African sub-region and beyond. When it was first established in 1988, it was a joint venture between the NNPC and Chevron with an equity structure of 51 percent to NNPC and 49 percent to Chevron.

However, on 1 January, 1994, Chevron divested its interest to VITOL Energy (Bermuda) Limited. The purposes of the joint venture were to increase the level of export of petroleum products and crude oil from Nigeria and to develop the expertise of NNPC’s staff in all aspects of international petroleum trading and related activities.

The signed joint venture agreement, however, has some curious provisions. Article 9.4 of the contract states that:

“NNPC recognizes that a key factor in the agreement is the supply of a minimum of 30,000 barrels a day of Nigerian crude oil to Calson for the duration of this agreement. Crude oil allocation is under the control of the Federal Government and not NNPC. NNPC agrees to use all possible efforts to ensure that this supply continues or is increased.”

Article 9.5 adds that:

“NNPC will ensure the allocation to Calson of a minimum of 25,000 metric tones per month of fuel oil for export.” The article further provides that “NNPC will make best efforts to ensure that Calson receives at least 30 percent of all surplus products over and above the internal requirements of Nigeria…NNPC will supply Calson 100 percent of all export Liquefied Petroleum Gas (LPG) from Port Harcourt refinery.

While petroleum industry experts describe Calson joint venture as a veritable pedestal of abuse of administrative privileges by NNPC even as they ask if the Federal Government that is supposed to give approval to such venture partnership, what is shocking is that in just a period of 15 months Nigeria lost $547,725,355 to VITOL and NNPC officials that are positioned to benefit from the administrative heist of crude oil price concessioning.

How the fraud works

NNPC officials use the cover of the joint venture partnership to allocate crude oil shipment to Calson (Bermuda) Limited at OPEC basket rate. The OPEC basket rate is the average of the price quoted for the different quality of crude oil produced by OPEC members.

The Nigerian Bonny Light, also referred to as sweet crude because it is excellent for making gasoline, is usually sold at the open market at a price of four to five dollars premium on each barrel of crude oil. This translates to mean that whoever gets the allocation from NNPC at the OPEC basket rate make a difference of between four to five dollar per barrel.

But according to documents at Fortune&Class Weekly disposal, after a crude oil shipment allocation have been confirmed for Calson (Bermuda) Limited, which has direct Nigerian interest in its operations and revenue, Calson will be compelled by a note from an NNPC official to sell the consignment to VITOL SA at a premium of only three cents.

“What this boils down to is that rather than Calson making the difference in between price and premium it is VITOL that makes the profit with only three cents reverting to Calson, I think that is the reason the Chief Executive of Calson informed VITOL that from May 2010, it would be selling its crude oil cargoes at competitive price and in the open market,” a petroleum industry expert explains.

At the moment, senior officials at the NNPC are said to be up in arms against the new directive to uphold open market competition in the sale of the nation’s crude oil.

However, in response to Fortune&Class Weekly enquiries on under pricing crude oil price through Calson (Bermuda) Limited transfer of its cargoes to VITOL, Mr. Aminu Baba Kosa who chairs the board of Calson on secondment from NNPC, says in a text message:

“Nigeria’s crude oil is never sold in any market at discount. So Calson would have no basis to sell to anybody at discount. Nigeria’s crude oil is monthly priced at the higher end of the market.

To be concluded next week

AIT ECHOES IN ODILI’s LOOT

Not a few people have long suspected that ex-Governor of Rivers State, Dr. Peter Odili, may have invested heavily in one of Nigeria terrestrial broadcasting outfits, operating as the African Independent Television in the Daar Communication holdings owned by Chief Raymond Dokpesi.

While conducting its investigations, officials of the Economic and Financial Crimes Commission had accosted Dr. Odili with the allegation that he invested the sum of N1.3billion in AIT between January and November 2006. The ex-Governor hotly contested this allegation, he insisted that the Rivers State Government is a stakeholder in Daar Communication and has investment of not less than 35 percent of the company’s equity capital. Odili reportedly explained that the fund was invested in the company in the name of the State.

Though EFCC officials were said to be preparing back then to interview the Chairman of Daar Communications, Chief Dokpesi, Fortune&Class Weekly’s independent crosschecks however reveals that Odili claim of the State government officially holding a stake in Daar Communications does not align with the claims by Chief Dokpesi in the Public Offer Prospectus of the company in February 2008 when it approached the Nigerian stock market to raise funds.

The Prospectus to the offer, a document revered as much as the holy grail during fund raising activities in the capital market, clearly states that Chief Dokpesi owns Daar Investment and Holding Company, which is the holding company of Daar Communications, the operating company of AIT , by a total 100 percent holding.

The nearest a mention is made in the holding structure of Daar is the listing of one Mrs. Toru Ofili as a non executive director of the company but no shares is ascribed to her either directly or indirectly.

FED. GOVT. AGENCY DECLARES WAR ON TELECOM COMPANIES

NESREA DG

The National Environmental Standards and Regulations Enforcement Agency (NESREA) may have declared a war of attrition on telecommunication companies that are known to have scant regard for Nigeria’s environmental upkeep.

As of last count, two chief executives of the GSM providing companies operating in the country have been drag before the court of law to answer charged that borders on criminal breaches.

In one of the cases, the Agency took the action owing to the company’s failure to produce the Environmental Impact Assessment Act Cap E12 Laws of the Federation of Nigeria. In furtherance of the sanction against the GSM service providing company, the base station belonging to the company in Kubwa, Abuja, was shut down on 11 February and criminal charges filed against the company at the Federal High Court, Abuja.

In the second case, a GSM telecom services providing giant has been dragged before a Federal High Court in Enugu on criminal charges of polluting drinking wells at Nkpologwu district at Emene, Enugu as a result of used diesel from its base station draining and seeping into people’s wells, contrary to extant laws and regulations.

EFCC TO PROSECUTE EX-GOV.ODILI OVER N100BN LOOT …N25bn Investment In Arik Air

The Economic and Financial Crimes Commission is believed to be finalizing arrangements to prosecute the immediate past governor of Rivers State, Dr. Peter Odili. To this end, the anti-graft agency has assigned its officials to validate an initial report of the agency put together after an investigative process in 2006.
At the heart of the criminal misconducts thrown up by the EFCC investigative panel in 2006 is how the then governor, Dr. Odili, actively used an associate, Mr. Johnson Arumemi-Ikhide, the man famously known to be the owner of Arik Air, to loot sums estimated to be over N100billion from the treasury of the state.
The EFCC report trails the relationship between ex-Governor Odili and Mr. Arumemi-Ikhide thus:
“Prior to becoming a major contractor to the state government in 2000, Mr. Johnson Arumemi-Ikhide was a shareholder of, and an executive director in, Negris Engineering Nigeria Limited. He worked for the company for over 18 years before leaving the company as a result of misunderstanding with other management staff, to form Rockson Engineering Nigeria Limited in 2000.
“While he was still with Negris, he provided an interface between Negris and Rivers State Government during which two major contracts were secured for the company. The contracts were the supply and installation of generating sets and transformer worth N401,016,101.00. The other contract was for the supply, construction and installation of turbine power station worth N4,256,076,000.00 in 2000.
The report notes that:
“The second contract was about 60 per cent completed when Mr. Johnson Arumemi-Ikhide left Negris and suddenly became the consultant to Rivers State on the same contract using his then newly formed company, Rockson Engineering Company Limited. The remaining payments for the Negris contract were routed through his company where the sum of N734,764,749.00 is yet to be remitted to Negris.”
The report adds that:
“The incorporation of Rockson Engineering Company Limited in 2000 immediately Arumemi-Ikhide left Negris marked the beginning of siphoning huge government fund that ran into several billions of Naira through gas turbine contract scam.”
The report highlights how several billions of Naira were transferred into accounts owned by Mr. Arumemi-Ikhide:
“Rivers State Government diverted the sum of N30,031,446,589.70 at various times to account number CA 6010914407 at Zenith Bank Plc belonging to Rockson Engineering Company Limited between January 07, 2004 and December 06, 2006. Investigations also reveals that Rockson Engineering has several bank accounts with Bank PHB, Sterling Bank Plc, United Bank for Africa, First Bank Plc, Intercontinental Bank Plc and Union Bank Plc. These banks were involved in the inflated contracts between Rockson Engineering and Rivers State Government.”
The EFCC report further notes that its investigations revealed that funds were diverted from Rivers State Government’s account to Rockson Engineering Limited, where it was transferred instalmentally between March 2005 and November 2006 from bank account number 6571020007472 with Union Bank Plc to the following companies.
a. Alpha System and Commodity Company Limited—N3,957,734,700.00
b. Sea Petroleum and Gas Company-N6,623,940,500.00
c. Peg Magreet Shipping and Trading Limited -N638,320,000.00
d. Wopat Nigeria Limited – N276,100,000
e. Dairy and Livestcok Limited – N281,000,000.00
f. Arula Investment Limited – N330,000,000.000
All totaling N12,107,105,000.00.”
The investigative report made more revelations on how Mr. Aruremi-Ikhide, who the report claims has a long lasting relationship with Dr. Odili which dates back to the 1980s, was used as the main front man for Dr. Odili.
“It has also been discovered that a parallel account called Account 2, account number 0130215431600, was opened with UBA Plc in the name of Rockson Engineering. Form 2001, when the account was opened to 2002, the sum of N12,064,988,787.61 was paid into the account from the Rivers State Government. Interestingly, Mr. Arumemi-Ikhide denied knowledge of the existence of this account. So far the sum of N12,059,602,734.20 has been withdrawn from the said account. This is clear evidence of direct looting of the treasury of Rivers State,” the report asserts.

While he was still with Negris, he provided an interface between Negris and Rivers State Government during which two major contracts were secured for the company. The contract were the supply and installation of generating sets and transformer worth N401,016,101.00. The other contract was for the supply, construction and installation of turbine power station worth N4,256,076,000.00 in 2000.

In direct reference to how Arik Air was funded and established, the report explains:
“It has also been established that Arumemi-Ikhide, the business partner of the Rivers State governor, is the owner of ARIK AIR LIMITED. He used money received from the Rivers States Government to acquire all the assets and aircraft of the company estimated to be worth over N25billion.”
Further establishing a direct link between Dr. Odili, Mr. Arumemi-Ikhide and Arik Air, the report submits that:
“The political and business relationship between Dr. Odili and Mr. Arumemi-Ikhide has become more obvious since the former’s declaration to run for the Presidency. Investigations conducted at various hotels, such as Transcorp Hilton, Le Meridien, Sheraton, etc; in Abuja revealed that the Odili Campaign Organization made bookings worth N130million through his campaign management team. The money came directly from the accounts of Arik Air Limited. The origin of the money is linked directly to Mr. Arumemi-Ikhide for Dr. Odili’s campaign.

To be concluded next edition.