September 18, 2021

Transparency, Accountability And Performance Excellence Has Eliminated Procurement Fraud In NNPC

6 min read

On July 27, 2021, an online medium published a write up titled “NNPC shocks manufacturers, undermines national interest in shady sale of Slop Oil” with several false allegations that looks like a sponsored publication by the bid losers.

Again, the same medium came up with another allegation with a caption “INVESTIGATION: NNPC in procurement fraud; two highest-bidders in slop oil sale are same people”.

For the fact that the companies that bided for the Slop Oil Sales have been found to be owned by the same Directors should not be the problem of the Nigerian National Petroleum Corporation in as much as they meet up with the pre-qualification conditions for buyers which included, among others; “Department of Petroleum Resources permits for petroleum products and/or waste oil handling; evidence of previous petroleum products/ crude oil transactions; letter of comfort or evidence of capacity to pay; a brief description of the intended use for the slop oil; Memorandum of Understanding (MoU) or Purchase Order (PO) from reputable companies if any; and an acceptance to indemnify NNPC/PHRC (against all liabilities in transit or use of the slop oil) in the event that you emerge the successful buyer.”

They included “provision of bank reference stating capability to issue irrevocable Letter of Credit (L/C) on behalf of the company; provision of tax clearance for the last two years with credit rating report on L/C; evidence of trade of 60,000 MT of petroleum products in the last 12 months; evidence of a minimum business turnover of $300 million, alternatively provide evidence of sufficient bank facility to cover L/C for the slop oil volume of 30,000m3; evidence of three (3) years audited accounts and financial statements and letter of assurance to handle all logistics and relevant permits issue from DPR, NOSDRA, NPA, Navy, NIMASA”.

The question now is: Does the companies that won the bid namely: Sign Oil & Gas Ltd, Synthesis Integrated Pure Oil and Gas Limited and Kurpo Energy Ltd meet up the pre-qualification conditions for buyers and the answer is yes.

On the allegations that three bidders took cues from NNPC insiders and decision-makers is false and can’t be substantially proved. The NNPC Management under the leadership of Mal Mele Kolo Kyari has brought about Transparency, Accountability and Performance Excellence into the operations of the Corporation.

The medium should know that most of the NNPC contractors do meet on regular basis and some even form partnership to bid and execute projects, so the issue of “a window to the behind-the-scenes maneuvers that underpinned the entire bid exercise.” is not possible.

On the claim of “insider dealing”, the medium should know that with the TAPE initiative been operated at the Corporation creates no room for the kind of under-hand dealings that were associated with the NNPC operations in the past.

For those who don’t know what Slop Oil is, it is considered crude oil which is emulsified with water and solids rendering it a waste stream that cannot be sold down the pipeline. Slop Oil, or secondary oil, is found in evaporation ponds, sludge pits, storage tanks, and permitted commercial disposal facilities. Slop Oil is not environmentally friendly.

Current options for disposal are expensive and hard to find. This leads to Slop Oils being stored in pits or tanks, wherever possible, until a better solution presents itself.

It will be recalled that on Tuesday 26 January 2021, the NNPC Requested for Submission of key pre-qualification Documentations for Slop Oil Purchase from PHRC.

The pre-qualification conditions for buyers included, among others, “Department of Petroleum Resources permits for petroleum products and/or waste oil handling; evidence of previous petroleum products/ crude oil transactions; letter of comfort or evidence of capacity to pay; a brief description of the intended use for the slop oil; Memorandum of Understanding (MoU) or Purchase Order (PO) from reputable companies if any; and an acceptance to indemnify NNPC/PHRC (against all liabilities in transit or use of the slop oil) in the event that you emerge the successful buyer.”

Another document shows that on 30th March 2021, the PHRC Slop Sale Committee rolled out additional conditions for the second stage of the bid exercise. They included “provision of bank reference stating capability to issue irrevocable Letter of Credit (L/C) on behalf of the company; provision of tax clearance for the last two years with credit rating report on L/C; evidence of trade of 60,000 MT of petroleum products in the last 12 months; evidence of a minimum business turnover of $300 million, alternatively provide evidence of sufficient bank facility to cover L/C for the slop oil volume of 30,000m3; evidence of three (3) years audited accounts and financial statements and letter of assurance to handle all logistics and relevant permits issue from DPR, NOSDRA, NPA, Navy, NIMASA”.

The above conditions are the standard requirements for the sales of Slop Oil both at Domestic and International level.

Claiming that the Technical evaluations of the bid process show that the Slop Oil Sale Committee did nothing to input national interest as a consideration to protect local manufacturers in Nigeria, is total false

From investigation, there were no any technical bottlenecks introduced to skew the process against Domestic companies as claimed by the publications.

On June 22, 2021, Port Harcourt Refinery Company issued a letter of allocation of 30-million-litre slop oil to Sign Oil & Gas as the bid winner.

It is a well laid down regulations that when the first bidder unable to meet the working-day deadline for payment, it will go to the next bidder.

In line with the Corporation’s commitment of becoming more accountable, transparent and driven by performance excellence, the slop oil allocation fell on the lap of the third winner, Korpu Energy Ltd at N99.00k per litre and it is not tailored to sell the slop oil to handpicked bidders as claimed by the publications.

For the fact that a company is an export company does not stop them bidding for contract as far as they meet up the entire requirement for such business. The companies that won the bid can easily liaise with the local manufacturers who normally import LPFO and this will save them the stress of importation.

It is strongly believed that bid winner will not evacuate and export the slop oil when the market is readily available in the country and no industries would be the worst hit.

The same bid process were administered to both Domestic and Export Companies right from the technical bid to commercial bid; no domestic companies were told to slug it out with export companies.

Probably, the aggrieved domestic companies that says there was no way they could outbid the export companies must have had issues with the bid requirements as the whole process was done in line with the TAPE agenda of the Group Managing Director of the NNPC, Mal Mele Kyari.

Even though the report says that there is the logistics involved in the local distribution of slop oil which, heavier than premium motor spirit or kerosene and making the costs of its transportation higher than those of other petroleum products, the bid winner will surely use its sophisticated technology to ensure the product get to the end users successfully.

For that fact that the Port Harcourt Refinery Company insisted the slop oil must be evacuated Ex Coastal for both export and domestic companies, the cost for domestic company to charter vessel (for those that don’t have), pay marine charges and in addition pay for storage facilities and pay for trucking to the final destination will probably be lower than those exporting it; it is a simple logic.

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